Paychex (NASDAQ:PAYX) Sees Large Volume Increase on Strong Earnings

Paychex, Inc. (NASDAQ:PAYX) shares saw unusually-strong trading volume on Wednesday following a better than expected earnings announcement. Approximately 1,366,527 shares traded hands during mid-day trading, a decline of 23% from the previous session’s volume of 1,776,359 shares.The stock last traded at $118.86 and had previously closed at $125.03.

The business services provider reported $1.12 earnings per share (EPS) for the quarter, topping the consensus estimate of $1.10 by $0.02. The firm had revenue of $1.30 billion during the quarter, compared to analyst estimates of $1.29 billion. Paychex had a return on equity of 46.14% and a net margin of 31.86%. The business’s revenue was up 5.3% compared to the same quarter last year. During the same quarter in the prior year, the company earned $0.97 EPS.

Paychex Increases Dividend

The business also recently declared a quarterly dividend, which was paid on Thursday, May 30th. Investors of record on Friday, May 10th were paid a $0.98 dividend. The ex-dividend date of this dividend was Thursday, May 9th. This represents a $3.92 annualized dividend and a dividend yield of 3.34%. This is an increase from Paychex’s previous quarterly dividend of $0.89. Paychex’s dividend payout ratio is presently 85.40%.

Wall Street Analyst Weigh In

Several analysts have commented on the company. Bank of America increased their target price on Paychex from $108.00 to $111.00 and gave the company an “underperform” rating in a research note on Wednesday, April 3rd. Evercore ISI restated an “in-line” rating and issued a $118.00 price target on shares of Paychex in a research note on Tuesday, March 26th. TD Cowen dropped their price target on Paychex from $122.00 to $121.00 and set a “hold” rating on the stock in a research note on Wednesday, April 3rd. Royal Bank of Canada reaffirmed a “sector perform” rating and issued a $130.00 target price on shares of Paychex in a report on Tuesday, May 21st. Finally, Wedbush reaffirmed a “neutral” rating and issued a $115.00 target price on shares of Paychex in a report on Wednesday, April 3rd. Two investment analysts have rated the stock with a sell rating and ten have given a hold rating to the stock. Based on data from MarketBeat, the stock presently has an average rating of “Hold” and an average target price of $123.00.

Insider Activity

In other news, Director David J. S. Flaschen sold 19,709 shares of the firm’s stock in a transaction dated Friday, May 24th. The stock was sold at an average price of $124.55, for a total transaction of $2,454,755.95. Following the completion of the transaction, the director now owns 5,383 shares in the company, valued at $670,452.65. The sale was disclosed in a document filed with the SEC, which is available at the SEC website. Company insiders own 11.50% of the company’s stock.

Institutional Inflows and Outflows

Several institutional investors and hedge funds have recently added to or reduced their stakes in the stock. Vanguard Group Inc. boosted its position in shares of Paychex by 0.4% during the first quarter. Vanguard Group Inc. now owns 30,541,306 shares of the business services provider’s stock valued at $3,750,472,000 after buying an additional 123,268 shares during the period. Capital International Investors raised its stake in Paychex by 12.8% in the first quarter. Capital International Investors now owns 20,878,283 shares of the business services provider’s stock worth $2,563,853,000 after buying an additional 2,373,894 shares in the last quarter. Morgan Stanley increased its position in shares of Paychex by 5.3% during the third quarter. Morgan Stanley now owns 3,598,560 shares of the business services provider’s stock worth $415,022,000 after purchasing an additional 182,648 shares in the last quarter. Envestnet Asset Management Inc. increased its position in shares of Paychex by 2.2% during the fourth quarter. Envestnet Asset Management Inc. now owns 2,687,859 shares of the business services provider’s stock worth $320,151,000 after purchasing an additional 56,793 shares in the last quarter. Finally, FIL Ltd increased its position in shares of Paychex by 32.4% during the fourth quarter. FIL Ltd now owns 2,548,000 shares of the business services provider’s stock worth $303,492,000 after purchasing an additional 623,000 shares in the last quarter. Hedge funds and other institutional investors own 83.47% of the company’s stock.

Paychex Stock Performance

The firm has a market capitalization of $42.26 billion, a price-to-earnings ratio of 25.58, a P/E/G ratio of 3.47 and a beta of 0.96. The company has a quick ratio of 1.24, a current ratio of 1.24 and a debt-to-equity ratio of 0.21. The business has a 50-day moving average price of $122.43 and a 200-day moving average price of $122.09.

About Paychex

Paychex, Inc provides integrated human capital management solutions for human resources (HR), payroll, benefits, and insurance services for small to medium-sized businesses in the United States, Europe, and India. It offers payroll processing services; payroll tax administration services; employee payment services; and regulatory compliance services, such as new-hire reporting and garnishment processing.