Paychex, Inc. (NASDAQ: PAYX) stock fell 2.5% on June 27th, 2018 (as of 11:44 AM GMT-4; Source: Google finance) after the company in the fourth quarter of FY 18 has reported the adjusted earnings per share of 61 cents, missing the analysts’ estimates for the adjusted earnings per share of 62 cents. The company had reported the adjusted revenue growth of 9.1 percent to $871.1 million in the fourth quarter of FY 18, beating the analysts’ estimates for revenue of $868 million. Payroll service revenue grew 3% to $452.4 million, just missing the FactSet consensus of $453.0 million, while human resources revenue rose 17% to $401.0 million to top expectations of $397.2 million.
Meanwhile, during FY 18, PAYX has completed the acquisitions of HR Outsourcing Holdings, Inc. (HROI), a national professional employer organization (PEO), and Lessor Group (Lessor), a market-leading provider of payroll and human resource (HR) software solutions headquartered in Denmark. The integration of these acquisitions has proceeded well. Further, during FY18, the company has repurchased 2.5 million shares of the common stock for a total of $143.1 million. In the respective prior year period, the company has repurchased 2.9 million shares for a total of $166.2 million.
Additionally, as of May 31, 2018 PAYX remained strong with cash and total corporate investments of $719.7 million and no debt. The slight decrease in cash and total corporate investments from $777.4 million as of May 31, 2017 is primarily the result of share repurchases, business acquisitions, and an increase in the rate for quarterly dividend payments, which offset cash generated from operations during FY18. Cash flows from operations were $1.3 billion for FY18, which is an increase of 33% over the prior year.
For FY19, the company expects adjusted earnings per share to increase 11% from 2018, while the current FactSet consensus of $2.79 implies 9.4% growth over 2018 adjusted earnings per share of $2.55. The total revenue, including interest on funds held for clients, is expected to increase in the range of 6 percent to 7 percent, while the analysts are expecting the revenue of $3.6 billion. The company projects payroll service revenue for the year to increase in the range of 2 percent to 3 percent, incorporating a full year of Lessor and HRS revenue to increase in a range of 10 percent to 11 percent.