Jim Cramer on Paychex: “It is a Little Tricky in a Declining Interest Rate Environment”

Paychex, Inc. (NASDAQ:PAYX) is one of the stocks Jim Cramer was recently focused on. Cramer discussed the stock’s price action after its earnings. He commented:

“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.”

Photo by Roberto Júnior on Unsplash

Paychex, Inc. (NASDAQ:PAYX) provides human capital management solutions for small and mid-sized businesses, including payroll processing, tax administration, HR, retirement services, benefits, and insurance. In addition, the company offers workforce management, compliance, and digital financial wellness tools.

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