Paychex, Inc. (NASDAQ:PAYX) and Actuant Corporation (NYSE:ATU) are trending after reporting earnings earlier today. Paychex is up by 0.6%, while Actuant is up by 10% in early morning trading after both companies beat expectations with their earnings reports. Let’s take a closer look at the financial results of the two companies and see how the world’s greatest investors view them.
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Paychex, Inc. (NASDAQ:PAYX) reported EPS of $0.58 on revenues of $723 million for its fiscal first quarter of 2016 versus expectations of $0.51 in EPS on revenues of $717.55 million. Human resource services revenue increased by 15% year-over-year to $279.7 million while payroll service revenue rose by 5% to $432.5 million. Operating income jumped by 11% to $296.1 million.
“Fiscal 2016 is off to a good start, and we have continued to experience positive results across our major product lines. Payroll service revenue growth was 5%, as expected. We continue to see strong demand for our human resource services, including double-digit growth in the number of client worksite employees served,” Chief Executive Officer Martin Mucci commented.
Guidance is solid. The leading provider of payroll solutions expects revenue to increase by 7-8% and net income to increase by 8-9% for fiscal year 2016. The guidance numbers are in the range of analyst estimates. Shares of Paychex are up by 4% year-to-date, outperforming the S&P 500.
Hedge funds were bullish on Paychex, Inc. (NASDAQ:PAYX) in the second quarter. 31 hedge funds owned $361.85 million of the company’s shares (representing 2.10% of the float) on June 30, versus 21 funds and $287.2 million respectively on March 31. Greg Poole’s Echo Street Capital Management increased its position by 431% to 617,209 shares while Paul Marshall and Ian Wace’s Marshall Wace LLP established a new position of 198,531 shares. Dmitry Balyasny’s Balyasny Asset Management increased its position of call options by 67% to cover 250,000 underlying shares, while Benjamin A. Smith’s Laurion Capital Management established a new position of call options underlying 200,000 shares. Going the other way was Clint Carlson‘s Carlson Capital, which decreased its position by 7% to 1.7 million shares.
In contrast to hedge funds, analysts think that Paychex is fully valued. Three analysts have a ‘Sell’ rating, four have a ‘Hold’ rating, and just two have a ‘Buy’ rating. Goldman Sachs has a ‘Neutral’ rating with a price target of $52 per share. JPMorgan has a ‘Neutral’ rating as well with the same price target. Overall, analysts have a consensus price target of $48.50 per share, giving Paychex 5.4% upside.
