Payroll and human resource solutions provider,
), is set to report fiscal second-quarter 2014 results on Dec 18,
2013, after market close. Last quarter, it posted a positive
earnings surprise of 2.33%. Let us see how things are shaping up
for this announcement.
Factors This Past Quarter
Paychex, Inc. is a provider of payroll and human resource (HR)
outsourcing services for small and medium-sized businesses
(SMBs). Its offerings include comprehensive payroll services,
including payroll processing, payroll tax administration and
employee pay services.
We remain encouraged by the company's investments in product
development and focus on building its sales force to support
revenue growth. We also believe that 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 estimates 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 stands at 42 cents. Thus, the ESP is 0.00%.
Paychex carries a Zacks Rank #2 (Buy) but a positive ESP would
have made us confident about an earnings beat.
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 in the imminent future is:
Winnebago Industries Inc.
), with Earnings ESP of +10.26% and a Zacks Rank #1 (Strong
AUTOMATIC DATA (ADP): Free Stock Analysis
INSPERITY INC (NSP): Free Stock Analysis
PAYCHEX INC (PAYX): Free Stock Analysis
WINNEBAGO (WGO): Free Stock Analysis Report
To read this article on Zacks.com click here.