Confluence Investment Management LLC Sells 40,001 Shares of Paychex, Inc. $PAYX

Key Points

• Confluence Investment Management reduced its Paychex stake by 3.9%, selling 40,001 shares and leaving it with 987,259 shares (about 0.28% of Paychex, worth ~$110.75 million), making PAYX its 21st largest holding.
• Paychex's board authorized a $1.0 billion share buyback (up to ~2.5% of stock) and the company pays a $4.32 annual dividend (yield ~4.7%) with a payout ratio near 98%.
• Paychex beat Q results (EPS $1.26 vs. $1.23, revenue +18.3% YoY) but several analysts have cut targets recently, leaving an average Street rating of "Reduce" and an average target price of ~$121.38.

Confluence Investment Management LLC decreased its holdings in Paychex, Inc. (NASDAQ:PAYX - Free Report) by 3.9% in the 4th quarter, according to its most recent Form 13F filing with the Securities & Exchange Commission. The institutional investor owned 987,259 shares of the business services provider's stock after selling 40,001 shares during the period. Paychex accounts for about 1.7% of Confluence Investment Management LLC's holdings, making the stock its 21st biggest position. Confluence Investment Management LLC owned 0.28% of Paychex worth $110,751,000 at the end of the most recent quarter.

Several other hedge funds and other institutional investors also recently modified their holdings of the business. Vanguard Group Inc. lifted its stake in shares of Paychex by 17.2% during the 3rd quarter. Vanguard Group Inc. now owns 37,765,468 shares of the business services provider's stock valued at $4,787,151,000 after buying an additional 5,549,511 shares in the last quarter. Norges Bank purchased a new position in Paychex in the 2nd quarter valued at approximately $302,244,000. Voloridge Investment Management LLC bought a new stake in Paychex during the 3rd quarter valued at $117,809,000. Marshall Wace LLP raised its holdings in Paychex by 179.5% during the 2nd quarter. Marshall Wace LLP now owns 1,078,328 shares of the business services provider's stock valued at $156,854,000 after acquiring an additional 692,533 shares during the period. Finally, JPMorgan Chase & Co. lifted its position in shares of Paychex by 29.2% during the second quarter. JPMorgan Chase & Co. now owns 2,542,901 shares of the business services provider's stock worth $369,901,000 after acquiring an additional 574,337 shares in the last quarter. Institutional investors own 83.47% of the company's stock.

Paychex Stock Up 1.2%

PAYX opened at $91.71 on Friday. The firm has a market capitalization of $32.92 billion, a P/E ratio of 20.80 and a beta of 0.91. Paychex, Inc. has a one year low of $86.89 and a one year high of $161.24. The company has a fifty day moving average price of $98.91 and a 200-day moving average price of $112.79. The company has a debt-to-equity ratio of 1.17, a current ratio of 1.27 and a quick ratio of 1.27.

Paychex (NASDAQ:PAYX - Get Free Report) last issued its quarterly earnings data on Friday, December 19th. The business services provider reported $1.26 earnings per share (EPS) for the quarter, topping analysts' consensus estimates of $1.23 by $0.03. The company had revenue of $1.56 billion for the quarter, compared to the consensus estimate of $1.55 billion. Paychex had a return on equity of 46.38% and a net margin of 26.45%.The firm's revenue was up 18.3% compared to the same quarter last year. During the same quarter last year, the business posted $1.14 earnings per share. Equities research analysts expect that Paychex, Inc. will post 4.99 earnings per share for the current fiscal year.

Paychex announced that its Board of Directors has initiated a share buyback plan on Friday, January 16th that allows the company to buyback $1.00 billion in shares. This buyback authorization allows the business services provider to reacquire up to 2.5% of its stock through open market purchases. Stock buyback plans are generally an indication that the company's management believes its stock is undervalued.

Paychex Dividend Announcement

The firm also recently announced a quarterly dividend, which was paid on Friday, February 27th. Shareholders of record on Wednesday, January 28th were paid a $1.08 dividend. This represents a $4.32 dividend on an annualized basis and a yield of 4.7%. The ex-dividend date was Wednesday, January 28th. Paychex's dividend payout ratio is currently 97.96%.

Wall Street Analyst Weigh In

A number of research firms have recently commented on PAYX. Wolfe Research cut their price target on Paychex from $130.00 to $115.00 and set an "underperform" rating for the company in a report on Wednesday, December 10th. Morgan Stanley dropped their price objective on Paychex from $133.00 to $123.00 and set an "equal weight" rating on the stock in a report on Monday, December 22nd. JPMorgan Chase & Co. cut their target price on Paychex from $140.00 to $125.00 and set an "underweight" rating for the company in a research note on Monday, December 22nd. Wells Fargo & Company reduced their target price on Paychex from $128.00 to $116.00 and set an "underweight" rating for the company in a report on Tuesday, December 9th. Finally, Argus decreased their price target on Paychex from $150.00 to $130.00 and set a "buy" rating on the stock in a research report on Friday, January 2nd. One equities research analyst has rated the stock with a Buy rating, fourteen have assigned a Hold rating and four have given a Sell rating to the stock. According to data from MarketBeat, the stock presently has an average rating of "Reduce" and an average target price of $121.38.

About Paychex

Paychex, Inc, founded in 1971 by B. Thomas "Tom" Golisano and headquartered in Rochester, New York, is a provider of payroll, human resources, and benefits outsourcing solutions for small- and medium-sized businesses. The company's core services include payroll processing and tax filing, employee benefits administration, retirement services, and workers' compensation administration, designed to simplify back-office operations and help clients comply with regulatory and tax requirements.

Paychex offers an integrated technology platform, marketed under the Paychex Flex brand, which delivers cloud-based payroll, HR, time and attendance, and reporting tools.

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