Paychex, Inc. (PAYX - Free Report) is scheduled to report third-quarter fiscal 2020 results on Mar 25, before market open.
Over the past year, shares of Paychex have declined 34% compared with 30% loss of the industry it belongs to and 18.2% decrease of the Zacks S&P 500 composite.
Let's check out how things have shaped up for the announcement.
The Zacks Consensus Estimate for Paychex’s third-quarter fiscal 2020 revenues stands at $1.14 billion, indicating an increase of 6.2% year over year. The top line is expected to have benefited from strength across total service revenues and interest on funds held for clients and contribution from Oasis acquisition.
Within total service, Management Solutions revenues are likely to have been driven by increase in the company’s client base and growth in revenue per check. Contribution from Oasis acquisition, growth in clients and client worksite employees across the company’s PEO business are likely to have boosted the PEO and insurance services revenues. The consensus mark for total service revenues stands at $1.12 billion, indicating 6.5% year-over-year growth.
Interest on funds held by clients is expected to have benefited from higher realized gains, average investment balances and average interest rates.
In second-quarter fiscal 2020, total revenues of $990.7 million increased 15% year over year.
The Zacks Consensus Estimate for earnings per share is pegged at 95 cents, indicating growth of 6.7% from the year-ago quarter reported figure. In second-quarter fiscal 2020, adjusted earnings of 70 cents per share increased 8% year over year.
What Our Model Says
Our proven Zacks model does not predict an earnings beat for Paychex this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Paychex has an Earnings ESP of -1.36% and a Zacks Rank #3.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks to Consider
Here are a few stocks that investors may consider from the broader Zacks Business Services sector as our model shows that these have the right combination of elements to beat on earnings:
FactSet Research Systems Inc. (FDS - Free Report) has an Earnings ESP of +0.76% and a Zacks Rank #2.
GreenSky, Inc. (GSKY - Free Report) has an Earnings ESP of +0.81% and a Zacks Rank #2.
Spotify Technology S.A. (SPOT - Free Report) has an Earnings ESP of +19.08% and a Zacks Rank #3.
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