What Happened?
Shares of payroll and human resources software provider, Paychex (NASDAQ: PAYX) jumped 6.2% in the morning session after the company reported decent first quarter (fiscal Q3 2025) earnings. There weren't many resounding positives in these results. Both revenue and EBITDA were roughly in line with expectations. However, free cash flow improved significantly.
Taking a closer look at the numbers, sales rose 5% year-on-year, with momentum coming from its core Management Solutions and PEO services, though growth was partly dampened by the end of its Employee Retention Tax Credit program.
Guidance for the full year was largely unchanged, though it was important to keep in mind the company's pending acquisition of Paycor, a move that could expand its market reach. Overall, this was a good quarter.
Is now the time to buy Paychex? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Paychex’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
Paychex is up 9.6% since the beginning of the year, and at $151.78 per share, it is trading close to its 52-week high of $154.52 from March 2025. Investors who bought $1,000 worth of Paychex’s shares 5 years ago would now be looking at an investment worth $2,312.
Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. We prefer a lesser-known (but still profitable) semiconductor stock benefiting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.
