Paychex beats fourth quarter EPS estimates, stock slides

Investing.com -- Paychex Inc. (NASDAQ: PAYX) reported fourth-quarter results that met revenue expectations and slightly exceeded earnings estimates, though shares fell 4% following the announcement.

The HR and payroll services provider posted adjusted earnings per share of $1.32 for the quarter ended May 31, 2026, beating the analyst consensus of $1.31. Revenue reached $1.61 billion, matching estimates and representing 12% growth compared to $1.43 billion in the same quarter last year. The results reflected a full quarter of revenue from Paycor HCM, which Paychex acquired in April 2025, compared to a partial quarter in the prior year.

For fiscal 2027, Paychex issued guidance calling for total revenue growth of 5% to 6%, with the midpoint of 5.5% below what would represent a continuation of the 12% growth rate seen in the fourth quarter. The company projected adjusted diluted earnings per share growth of 7% to 9%, which would translate to a range of $5.90 to $6.01 based on fiscal 2026's adjusted EPS of $5.51.

"We finished fiscal 2026 with strong momentum, delivering double-digit revenue and earnings growth while accelerating organic revenue growth throughout the year," stated John Gibson, President and Chief Executive Officer.

Management Solutions revenue increased 14% to $1.2 billion, with Paycor contributing approximately 8% to that growth. PEO and Insurance Solutions revenue rose 9% to $369.7 million, driven by growth in average PEO worksite employees. Operating income surged 40% to $604.7 million, while adjusted operating income grew 17% to $675.8 million.

For the full fiscal year 2026, Paychex reported adjusted diluted earnings per share of $5.51, up 11% from $4.98 in fiscal 2025. The company returned $2.2 billion to shareholders during the year through dividends and share repurchases.

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