Paychex stock gains after profit and revenue beats, upbeat outlook

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Paychex Inc. reported Tuesday fiscal first-quarter profit and revenue that fell less than expected, and provided an upbeat full-year earnings outlook, citing a faster-than-anticipated recovery from the negative effects of the COVID-19 pandemic. The human resources management company’s stock edged up 0.2% in premarket trading, after closing Monday at a 7-month high. Net income fell to $211.6 million, or 59 cents a share, from $264.2 million, or 73 cents a share, in the year-ago period. Excluding non-recurring items, adjusted earnings per share slipped to 63 cents from 71 cents, but beat the FactSet consensus of 55 cents. Total revenue declined 6% to $932.2 million, but was above the FactSet consensus of $895.4 million, as service revenue of $917.3 million topped expectations of $881.3 million. For fiscal 2021, the company expects adjusted EPS to decline 6% to 8% from a year ago, while the FactSet 2021 EPS consensus of $2.75 implies an 8.3% decline. “The effects of the COVID-19 pandemic continue to impact our results causing unfavorable year-over-year comparisons, however, client retention has remained strong and sales performance is accelerating with year-over-year growth in the number of clients sold,” said Chief Executive Martin Mucci. The stock has slipped 4.2% year to date through Monday, while the S&P 500 has gained 5.5%.
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