Why Paychex Stock Topped the Market Today

Paychex (NASDAQ: PAYX) notched slight beats on both the top and bottom lines in its latest quarter. Consequently, its share price rose slightly on the news. The financial services company's stock bumped 1.4% higher across Thursday's trading session, which was a better performance than the benchmark S&P 500 index's marginal decline.

Single-digit growth in quarterly fundamentals

Paychex unveiled its second quarter of fiscal 2025 results before market open on Thursday, revealing that it earned just under $1.32 billion in total revenue. That was an improvement of 5% over the same period last year. The dynamic was similar on the bottom line, as non-GAAP (adjusted) net income enjoyed 5% year-over-year growth to $411 million ($1.14 per share).

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Both headline numbers edged past the consensus analyst estimates. On average, pundits tracking Paychex stock were modeling $1.31 billion on the top line and $1.13 per share for adjusted net income.

In its earnings release, Paychex said that its core management-solutions business grew by 3% (to almost $963 million) on the back of an increase in client count. What also helped was higher product penetration in fields such as human-resources solutions and retirement.

More of the same expected

Management reiterated the guidance it provided for the entirety of fiscal 2025. It continues to expect 4% to 5% revenue growth for the period compared to fiscal 2024, with 5% to 7% expansion in adjusted, per-share net income.

Paychex feels like a "steady as she goes" business these days, and as long as a rising economy keeps small and mid-sized businesses (SMBs) afloat, the company should do fine. The company continues to hand out a relatively generous dividend that yields nearly 3%, so it might be of particular interest to income investors looking for something of an under-the-radar play.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.