How Is Paychex Expected To Perform In 2016?
Paychex’s (NASDAQ:PAYX) revenues have grown by 8-9% over the last few years, with much of the growth coming from its HR outsourcing and services business. HR outsourcing revenues have grown at over 15% over the last few years, with the company cementing its position as the market leader for HR outsourcing for small and medium sized businesses. Comparatively, its core payroll processing business has grown at a steady 3-4%, owing to consistent 2-4% price increases over the last few years to complement the growth in its customer base. [1] We forecast Paychex’s net revenues to increase by 8% this year, with the most growth coming from HR outsourcing and services. Additionally, Paychex managed to limit the increase in expenses leading to healthier margins.
Given that Paychex’s expenses in the Payroll division and interest income are largely fixed in nature, we expect the revenue growth to translate to an improvement in margins. Consequently, Paychex’s adjusted EBITDA margin for 2016 could increase from 43.5% in 2015 to 45.5% in 2016.
Have more questions about Paychex (NASDAQ:PAYX)? See the links below:
- What’s Paychex’s Fundamental Value Based On Expected 2016 Results?
- What’s Paychex’s Revenue & Earnings Composition?
- How Has Paychex’s Revenue & EBITDA Composition Changed In The Last Five Years?
- Where Will Paychex’s Revenue Growth Come From In The Next Five Years?
- How Do Paychex And ADP Compare On Core Payroll Processing Business?
Notes:
- Can Paychex Stock Recover To Its Pre-Inflation Shock Highs?
- Can Paychex Stock Recover To Its Pre-Inflation Shock Highs?
- With The Job Market Holding Up, What To Expect From Paychex Q2 Results?
- What To Expect From Paychex Q1 Results
- What’s Happening With Paychex Stock?
- Forecast Of The Day: Paychex Management Solutions Revenue
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- Paychex Q2 2016 Earnings Call Transcript, Seeking Alpha, December 2015 [↩]