Paychex (PAYX 1.44%) notched slight beats on both the top and bottom lines in its latest quarter. Consequently, its share price rose slightly on the news. The financial services company’s stock bumped 1.4% higher across Thursday’s trading session, which was a better performance than the benchmark S&P 500 index’s marginal decline.
Single-digit growth in quarterly fundamentals
Paychex unveiled its second quarter of fiscal 2025 results before market open on Thursday, revealing that it earned just under $1.32 billion in total revenue. That was an improvement of 5% over the same period last year. The dynamic was similar on the bottom line, as non-GAAP (adjusted) net income enjoyed 5% year-over-year growth to $411 million ($1.14 per share).
Both headline numbers edged past the consensus analyst estimates. On average, pundits tracking Paychex stock were modeling $1.31 billion on the top line and $1.13 per share for adjusted net income.
In its earnings release, Paychex said that its core management-solutions business grew by 3% (to almost $963 million) on the back of an increase in client count. What also helped was higher product penetration in fields such as human-resources solutions and retirement.
More of the same expected
Management reiterated the guidance it provided for the entirety of fiscal 2025. It continues to expect 4% to 5% revenue growth for the period compared to fiscal 2024, with 5% to 7% expansion in adjusted, per-share net income.
Paychex feels like a “steady as she goes” business these days, and as long as a rising economy keeps small and mid-sized businesses (SMBs) afloat, the company should do fine. The company continues to hand out a relatively generous dividend that yields nearly 3%, so it might be of particular interest to income investors looking for something of an under-the-radar play.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
