Two large-cap stocks released quarterly results before the opening bell on Wednesday.
Shares of Paychex Inc. (PAYX) declined 3.57% to $81.77 on Wednesday after missing consensus estimates on non-GAAP earnings for the fourth quarter of fiscal 2019 by 1 cent, posting 63 cents per diluted share. The result reflected an 8.6% increase from the prior-year quarter.
GAAP earnings increased 6.7% year-over-year to 64 cents per diluted share.
Revenue grew 15.9% to $980.4 million, beating expectations by $890,000.
By segment, management solutions revenue increased 4% to $694.9 million, making up nearly 71% of total revenue, and professional employer organization and insurance services revenue increased nearly 67% to $263.3 million, accounting for 27% of total revenue.
The Rochester, New York-based provider of payroll and human resource services also released financial results for its fiscal year 2019. Revenue grew 12% from fiscal year 2018 to $3.8 billion, operating income increased 6% to $1.37 billion and net income jumped 4% to $1 billion. Diluted earnings per share were $2.86 versus $2.75.
For fiscal year 2020, Paychex forecasts 10-11% growth in revenue to approximately $4.18 billion to $4.22 billion compared to estimates of $4.16 billion. Non-GAAP earnings per diluted share are expected to grow 8-9% to a range of $3.06 to $3.10 versus expectations of $3.10.
The balance sheet of Paychex had $798.5 million in cash on hand as of May 31. Long-term borrowings amounted to $796.4 million.
In 2019 Paychex allocated $56.9 million for the repurchase of 700,000 shares of its own common stock versus $143.1 million allocated in 2018 for the repurchase of 2.5 million shares.
The share price has climbed 20% for the past year through June 26 and is below the 100- and 50-day simple moving average lines. The share price is still above the 200-day SMA line. The 52-week range is $61.32 to $88.43 and the market capitalization is approximately $29.39 billion.
The company pays a cash quarterly dividend of 62 cents for a forward dividend yield of 2.92% versus the industry median of 2.5% as of Wednesday.
Wall Street has a hold recommendation rating on Paychex with an average target price of $80.71 per share.
Shares of IHS Markit Ltd. (INFO) soared 5.25% to $62.37 on Wednesday after beating expectations on non-GAAP earnings for the second quarter of fiscal 2019 by 6 cents, issuing 71 cents per diluted share. The earnings result reflected 16.4% growth from the prior-year quarter.
The company also posted GAAP earnings of 37 cents per diluted share, which was a 32.1% increase.
Revenue increased 14% to $1.14 billion and was in-line with estimates.
By transaction type, recurring fixed revenue increased 12.5% to $785.2 million, recurring variable revenue grew 15.2% to $145 million and non-recurring revenue jumped 11.4% to $205.3 million.
The London-based critical information and analytics provider also recorded increases of 17% in adjusted Ebitda to $465 million and 11% in operating cash flow to $425 million. Free cash flow was $358 million compared to $323.2 million.
For fiscal year 2019, IHS Markit Ltd. confirmed that earnings per share should fall within a range of $2.52 to $2.57Â versus estimates of $2.55, on revenue between $4.43 billion and $4.5 billion versus estimates of $4.45 billion.
In addition, the balance sheet had $173.1 million in cash on hand and $5.26 billion in total debt as of May 31.
The share price of the stock increased 20% in the past year through June 26 and is now significantly above the 200-, 100- and 50-day simple moving average lines. The 52-week range is $44.52 to $62.46, and the market capitalization is roughly $24.93 billion.
The company is not paying a dividend.
Wall Street issued an overweight recommendation rating for the stock, meaning it is predicted to outperform either the industry or the overall market within 52 weeks. The average target price of $61.81 is 1.5% lower than the share price at close on Wednesday.
Disclosure: I have no positions in any securities mentioned.
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