[ACCESSWIRE]
LONDON, UK / ACCESSWIRE / September 30, 2016 / Active Wall St. announces its post-earnings coverage on Paychex, Inc. (NASDAQ: PAYX). The company posted its financial results for the first quarter fiscal 2017 (Q1 FY17) on September 28, 2016. The Rochester, New York-based company's Q1 FY17 total revenues grew 9% on y-o-y basis, while net income improved 4% y-o-y the reported quarter; both beating marketing expectations. Register with us now for your free membership at: http://www.activewallst.com/register/.
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Earnings Reviewed
In the quarter ended on August 31, 2016, Paychex's reported total revenue of $785.5 million compared to total revenue of $723.0 million recorded at the end of Q1 FY16. Total revenue numbers underperformed market estimate of $782.8 million. The company's total service revenue also grew 9.0% y-o-y in Q1 FY17 to $773.5 million from $712.2 million for the year-ago period.
The human resources services provider reported Q1 FY17 net income of $217.4 million, or $0.60 diluted per share, which was above $209.1 million, or $0.58 diluted per share, in the prior year's comparable quarter and above market consensus estimates of $0.57 per diluted share. The company's net income growth was positively impacted by 5% to 6% approximately improved results across business segments.
Martin Mucci, President and Chief Executive Officer of Paychex, said:
"We're off to a solid start for fiscal 2017 with positive results across all major product lines. The number of client worksite employees served by our human resource outsourcing services grew by double digits over on a year-over-year basis."
Operating Metrics
The company's total expenses increased 8% y-o-y to $462.5 million in the reported quarter. The quarterly total expense growth was due to a 6% increase in compensation-related costs, primarily on higher wages due to an increased headcount in both operations and sales.
During Q1 FY17, the company's operating income grew 9% y-o-y to $323.0 million from $296.1 million in the prior year's comparable quarter. Furthermore, operating income as a percentage of total revenue came in at 41% similar to the figures recorded in the year ago period.
Segment-wise
Paychex's Payroll service revenue grew 4% y-o-y to $450.9 million in Q1 FY17 from $432.5 million in Q1 FY16. The company attributed this growth to improved client base and revenue per check.
Due to increased client base across all major Human Resource Services segment, this segment's revenue surged 15% y-o-y in Q1 FY17 to $322.6 million from $279.7 million in the prior year's compatible quarter.
Cash Low and Balance Sheet
Paychex reported cash flow from operations improved 6% y-o-y to $294.7 million in Q1 FY17 from $278.3 million in Q1 FY16. The increased operating cash flow was primarily attributed to higher net income adjusted for non-cash items, partially offset by negative impacts of working capital fluctuations.
The company reported cash and cash equivalents balance of $130.0 million on August 31, 2016, compared to $131.5 million as on May 31, 2016. Paychex has not reported any long-term debt in its books of accounts as of August 31, 2016.
Outlook
For full year FY17, Paychex's expects Payroll Service revenue to increase in the range of 3% to 4%. The company forecasts for an approximate 7% y-o-y growth in its net income for fiscal year ending May 31, 2017. The company's management anticipates a 12% to 14% y-o-y growth in Human Resource Services revenue in FY17. Moreover, total service revenue is expected to increase in the range of 7% to 8% in the current fiscal year.
Stock Performance
Paychex's share price finished yesterday's trading session at $57.16, slightly sliding 0.59%. A total volume of 2.49 million shares exchanged hands, which was higher than the 3 months average volume of 2.13 million shares. The stock has advanced 7.19% and 24.01% in the last six months and past twelve months, respectively. Furthermore, since the start of the year, shares of the company has gained 10.78%. The stock is trading at a PE ratio of 27.38 and has a dividend yield of 3.22%.
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