) is expected to report third-quarter fiscal 2014 results after
the market closes on March 26. In the last quarter, it delivered
+2.38% earnings surprise. Let's see how things are shaping up for
Factors to Consider
Paychex provides payroll and human resource (HR) outsourcing
services to small and medium-sized businesses (SMBs). Its
offerings include comprehensive payroll services, including
payroll processing, payroll tax administration and employee pay
We remain encouraged by the company's investments in product
development and focus on building its sales force to support
revenue growth. In our view, the company's expansionary
initiatives through joint ventures and acquisitions should bode
well for its long-term growth strategy.
Product launches are also expected to provide additional
support. Moreover, Paychex's focus on SMBs looking for HR
solutions could provide the company with opportunities.
However, unfavorable interest rates and stiff competition from
Automatic Data Processing
) remain the possible headwinds for the company.
Our proven model does not conclusively show that Paychex is
likely to beat earnings estimate this quarter. This is because a
stock needs to have both a positive
and a Zacks Rank #1, 2 or 3 for this to happen. This is not the
case here as you will see below.
Both the Most Accurate estimate and the Zacks Consensus Estimate
currently stand at 42 cents. Thus, the ESP is 0.00%.
Paychex carries a Zacks Rank #3 (Hold) which when combined with a
0.00% ESP makes surprise predictions difficult.
We caution against stocks with Zacks Ranks #4 and 5
(Sell-rated stocks) going into the earnings announcement,
especially when the company is seeing a negative estimate
Another company that you may want to consider as our model
shows that it has the right combination of elements to post an
earnings beat is:
), Earnings ESP of +25.0 % and a Zacks Rank #2 (Buy).
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PAYCHEX INC (PAYX): Free Stock Analysis
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