Paychex Inc. (PAYX: Quote) said Wednesday after the markets closed that its fourth quarter profit rose 4% from last year, helped by strong performance of both its payroll and human resource services businesses.
The company's quarterly earnings per share came in line with analysts' expectations, but its quarterly revenue fell short of analysts' forecast.
Paychex shares are currently losing 1.28% in after hours trading after closing the day's regular trading session at $31.93, up 17 cents.
The company's total service revenue for the quarter increased 6% year-over-year to $540.7 million. Payroll service revenue grew 4% due to higher checks per payroll and revenue per check. Human resource services revenue surged 12% to favorable check volume, price increases and client growth.
Rochester, New York-based Paychex, which competes with Automatic Data Processing, Inc. (ADP), has reported higher profits in recent quarters. However, high unemployment and lower interest rates have blunted its earnings, as it has not been able to grow client base or increase the interest on funds held for clients.
For the fourth quarter ended May 31, 2012, the company reported net income of $123.3 million or $0.34 per share, compared to $118.9 million or $0.33 per share for the year-ago quarter.
On average, 23 analysts polled by Thomson Reuters expected the company to earn $0.34 per share for the fourth quarter.
Paychex, which manages payroll accounting for small to medium sized companies, said total revenue for the fourth quarter rose 6% to $551.5 million from $522.7 million in the same quarter last year. Nineteen analysts had a consensus revenue estimate of $557.67 million for the fourth quarter.
Looking forward to fiscal 2013, the company forecast net income to grow 5% to 7% and total service revenue to grow 5% to 6% over fiscal 2012. Payroll service revenue is expected to grow 3% to 4%, while human resource services revenue is expected to grow 9% to 11%.
Martin Mucci, President and Chief Executive Officer, said, "Our expected fiscal 2013 payroll revenue growth rate is based upon anticipated client base growth, offset by an expected lower rate of growth in checks per payroll, and modest increases in revenue per check. Human Resource Services revenue growth is expected to remain in line with our historical organic experience. Prior acquisitions are expected to have minimal impact to projected revenue growth rates for fiscal 2013."
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by RTT Staff Writer
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