PayChex (PAYX) Pre-earnings Analysis
Chart done on daily timeframe. PayChex investors are awaiting the company’s next earnings release, which is scheduled on April 2nd before market open. The human capital management company has high expectations this earnings season as analysts have higher profitability estimates than the last four quarters. The company topped three out of the last four estimates in Q2 23, but generally speaking they’ve grown profitability consistently over the past five years. Revenue has also grown steadily as the company takes on more of the market share from big competitors like ADP and Paylocity. Their price to earnings ratio is currently 26.87, which is considered a bit expensive, but in-line with the industry’s leader ADP at 28.82. Free cash flow is also at a positive 1.86B, giving the company a modest cash cushion if emergencies arise, or to increase their dividend. The most notable thing about PAYX for investors is probably their dividend so their focus will remain on revenue and free cash flow, PAYX just needs to keep doing what it’s doing to keep investors happy.
Option chain analysis:
Considering their revenue estimates are above the last four quarters, PAYX will likely have a strong positive reaction if they beat expectations. Their next option expiration is April 19th, which is currently reflecting an implied volatility reading of 29.67%. This translates to about a $7.44 move on the underlying stock. The direction of the move will rely on the earnings outcome.