Paychex (NASDAQ:PAYX) EPS Up on Cost Controls

Paychex (NASDAQ:PAYX) was able to beat earnings expectations as they put cost controls in place which suprised the Street with the results.

Barclays (NYSE:BCS) said, "On Monday night, Paychex reported good F2Q'11 results as a modestly improving economy combined with strong cost controls to drive a $0.02 EPS surprise vs. consensus expectations. PAYX flowed through the beat into a modest increase in FY'11 guidance...On a positive note, checks per client, revenue per check, and client retention all improved y/y, and service revenue grew a solid 3.5% (though down from the 4.1% y/y growth reported last quarter).

"At 22.0x and 20.8x our CY'10 and CY'11 EPS estimates of $1.40 and $1.47, we believe PAYX already prices in its strong business model and a healthy growth rebound, and find the stock fairly valued."

Barclays reiterates an "Equalweight" on Paychex, which closed Wednesday at $31.05, up $0.38, or 1.34 percent. Barclays has a price target of $30 on the company.