Why Paychex Stock Popped on Wednesday

Core Viewpoint - Paychex reported mixed earnings results, with a slight beat on earnings per share but a miss on sales, while the stock price increased significantly despite concerns about future profitability [1][2][4]. Group 1: Earnings Performance - Paychex's sales grew by 5% year over year in Q3, while adjusted earnings per share increased by 8%, exceeding expectations [2]. - GAAP earnings per share rose by only 4% to $1.43, indicating slower growth compared to the adjusted figures [2]. Group 2: Acquisition Update - The waiting period for Paychex's acquisition of Paycor has expired without government objection, allowing the acquisition to proceed as planned, with a probable closing in April [3]. Group 3: Future Guidance - Management did not provide specific earnings guidance for fiscal Q4 but indicated that adjusted operating margins increased by 180 basis points to 46.9% in Q3, with expectations of a decline to around 43% in Q4 [4]. - The company maintains its previous guidance for fiscal 2025, forecasting earnings growth of 4% to 5.5% and adjusted earnings growth of 5% to 7%, along with operating margins of 42% to 43% [5][6].