Payroll and human resource solutions provider, Paychex Inc. PAYX is set to report fourth-quarter fiscal 2015 results on Jul 1. Last quarter, the company’s earnings matched expectations. Let us see how things are shaping up for this announcement.
Factors to Consider
Paychex reported decent third-quarter results wherein its bottom line came in line with the Zacks Consensus Estimate while the top line beat the same. Moreover, on a year-over-year basis, both revenues and earnings increased.
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 such as joint ventures and acquisitions support its long-term growth strategy.
Product launches are also expected to provide additional support. Moreover, Paychex’s focus on small and mid-sized businesses looking for HR solutions could provide the company with additional opportunities.
However, unfavorable interest rates and competition from Automatic Data Processing ADP and Insperity remain the possible headwinds for the company.
Earnings Whispers?
Our proven model does not conclusively show that Paychex will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Zacks ESP: Both the Most Accurate estimate and the Zacks Consensus Estimate stand at 44 cents. Hence, the difference is 0.00%.
Zacks Rank: Paychex’s Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Here are some other companies, which you may consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Advanced Micro Devices, Inc. AMD has an Earnings ESP of +9.09% and a Zacks Rank #2 (Buy)
Constellation Brands Inc. STZ has an Earnings ESP of +3.28% and holds a Zacks Rank #2
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment