Paychex (PAYX) Stock Slides 5% Despite Earnings Beat

  • Paychex (PAYX) stock slumped soon after the opening bell rang on Wall Street.
  • Yet, the company released fiscal data that indicated robust year-over-year growth for Paychex.
  • Moreover, Paychex posted optimistic forward guidance for fiscal 2023.
PAYX stock - Paychex (PAYX) Stock Slides 5% Despite Earnings Beat

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Payroll services specialist Paychex (NASDAQ:PAYX) stock is trending on social media as it declined quickly in early-morning trading today. At the same time, Paychex’s freshly released financial results demonstrated improvement in practically every category.

Virtually everywhere you look, you’ll see double-digit year-over-year growth in Paychex’s results for the fiscal fourth quarter ended May 31, 2022, and for fiscal 2022, which ended that same day. Starting with the top-line results, Paychex’s Q4 total service revenue, total revenue and operating income all increased 11%. For full fiscal year 2022, the company’s total service revenue and total revenue both grew 14%, while Paychex’s operating income increased 26% — not too shabby.

Turning to the top line, Paychex reported Q4 adjusted diluted earnings per share (EPS) of 81 cents, up 13% and slightly beating the FactSet (NYSE:FDS) consensus estimate of 80 cents per share. On top of all that, Paychex’s FY2022 adjusted diluted earnings per share grew 24% to $3.77.

Additionally, Paychex posted ambitious forward guidance. The company projects adjusted earnings-per-share growth of 9% to 10% for fiscal 2023, which is significantly higher than the FactSet consensus estimate of 7.7% growth.

What’s Happening With PAYX Stock?

Despite all of these positive data points, PAYX stock dropped 5% in early-morning trading today, sliding below the $115 level. It’s a tough blow for the shareholders as the Paychex share price has been in a general state of decline since early April.

There is a consolation prize, though. In its own way, Paychex gives its investors a paycheck every three months in the form of dividends. Currently, the company pays a forward annual dividend yield of 2.72%. So, perhaps that will cushion the blow somewhat.

Still, it’s undoubtedly frustrating to witness PAYX stock continue its decline. It might be somewhat baffling, as well, since Paychex seems to be handling macroeconomic challenges well.

Could there be a prime dip-buying opportunity here, then? That’s up to you to decide, but Paychex Chairman and CEO Martin Mucci seems confident about his company’s prospects. He commented, “We are pleased with our fiscal 2022 results” — and even if Wall Street disagrees in the short term, there just might be a long-term trading opportunity here.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.


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