(By Balaseshan) Paychex Inc. (NASDAQ:PAYX) reported a 4% increase in fourth quarter earnings helped by a double-digit growth in human resources services revenue and a moderate increase in new payroll sales. Despite revenue missing consensus, earnings came in-line with Street's expectations.
Earnings for the fourth quarter were $123.3 million or $0.34 per share, up from $118.9 million or $0.33 per share last year.
Revenue grew 6% to $551.5 million. Analysts had expected a profit of $0.34 per share on revenue of $557.67 million.
Payroll service revenue increased 4% to $369.5 million. Organic growth in payroll service revenue was about 3% due to higher checks per payroll and revenue per check. Checks per payroll increased 1.9% for the fourth quarter.
Human resource services revenue grew 12% to $171.2 million. Organic growth in Human Resource Services revenue was about 9%, attributable to favorable check volume, price increases, and client growth.
Interest on funds held for clients, which was included in the total revenue, declined to 1.0% from 1.2%, due to lower average interest rates earned.
Looking ahead into the fiscal 2013, the company expects earnings to increase 5% to 7% and service revenue growth of 5% to 6%. Street analysts expect earnings per share to increase 7.20% from last year on revenue growth of 6.50%.
Interest on funds held for clients and investment income for fiscal 2013 are expected to continue to be impacted by the low interest rate environment, the company said.
PAYX closed Wednesday's regular session up 0.54% at $31.93. The stock has been trading between $25.12 and $32.73 for the past 52 weeks.