Bigger payrolls could mean good times ahead forPaychex (
), a provider of payroll, human resources and employee benefits
outsourcing services for small and midsize companies.
The Rochester, N.Y.-based company extended its quarterly
profit growth streak for a 14th straight quarter after reporting
fiscal Q2 results Wednesday after the close. It earned 43 cents a
share, up 5% from the prior year and a penny over views.
Revenue rose 7% to $610.5 million, as human resources services
revenue jumped 12% and payroll services revenue 4%.
Year-over-year profit gains have ranged between 2% and 14% the
past 14 quarters. That stable growth shows up in its three-year
Earnings Stability Factor of 1 and five-year factor of 5, on a 0
to 99 scale. The lower the number, the steadier the growth.
Its annual earnings stumbled in fiscal 2009 and 2010 as the
financial crisis took a toll on the economy, but has been back on
the growth track since. With the economy and overall jobs picture
improving, analysts forecast 6% growth in fiscal 2014 and 7% in
Paychex's dividend payout has trended higher throughout the
years. The firm didn't halt its dividend even during the leaner
financial crisis years -- it just didn't increase the amount. It
began boosting the dividend in October 2011, and has paid out 35
cents a share the past two quarters for an annualized yield of
3.2%. That's higher than the S&P 500's 2.43% yield.
Its return on equity is 35% and has held at or above that
level since fiscal 2008. Its ROE is well above the 17% threshold
investors should aim for. Paychex also carries no debt.
The stock bounced off support at its 10-week moving average
and gapped up Thursday to a six-year high in heavy volume. It's
been in a wide trading range since peaking in late 2000. Paychex
was a rapid riser during the '90s.
It's advanced 44% this year, outperforming the Nasdaq's 34%