Jim Cramer Highlights Paychex’s Role in Managing Payouts

Paychex, Inc. (NASDAQ:PAYX) is one of the stocks on Jim Cramer’s game plan this week. Cramer finished his game plan with the stock, as he commented:

“Finally, Friday, we have a bunch of good reads on a slew of different industries… Paychex handles the payouts of millions of individuals who work at small and medium-sized firms. We need every piece of data to keep up on what’s really happening as the money rotates from the Magnificent Seven to all these other different areas, kind of like a fire hose.”

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Paychex, Inc. (NASDAQ:PAYX) provides human capital management solutions, including payroll processing, payroll tax and compliance, HR administration, benefits, and workforce management for small to mid-sized businesses. Cramer mentioned the stock during the September 30 episode and said:

“What happened today to the stock of Paychex, the payroll processor, human capital management company that caters to small, medium-sized businesses? After reporting what to me seemed like a real solid set of numbers this morning, the stock plunged 7% early in the trading session, largely because I think some people felt the margins were taking a hit. But as I’ve told you repeatedly, the stock tends to sell off in response to earnings, even when the numbers are good.

Maybe Wall Street got the memo because ultimately Paychex rebounded, finishing the day off nearly 1.4%. That’s a, it is a little tricky in a declining interest rate environment. There is a payroll processor issue. The company actually makes more money when rates are high, but after employers prefund their payrolls, Paychex collects interest on that money for every minute before it’s deposited in your bank account… That used to be a big issue, but the company’s gotten well beyond that. There’s a lot of other levers that it pulls.”

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Disclosure: None. This article is originally published at Insider Monkey.