Indivisible Partners Invests $3.50 Million in Paychex, Inc. $PAYX

Key Points

• Indivisible Partners opened a new position in Paychex, buying 31,216 shares valued at about $3.50 million, while institutional investors now own roughly 83.47% of the company.
• Paychex beat expectations for the quarter with $1.71 EPS vs. $1.67 estimated and revenue of $1.81 billion (up 19.9% year-over-year), showing strong profitability (ROE 48.52%, net margin 25.84%).
• The board raised the quarterly dividend to $1.19 (annualized $4.76, yield ~5.1%) and authorized a $1.00 billion share buyback (up to 2.5% of shares), even as several analysts trimmed price targets and the consensus rating sits at "Reduce."

Indivisible Partners bought a new position in shares of Paychex, Inc. (NASDAQ:PAYX - Free Report) in the fourth quarter, according to the company in its most recent filing with the SEC. The fund bought 31,216 shares of the business services provider's stock, valued at approximately $3,502,000.

A number of other institutional investors have also modified their holdings of the company. Vanguard Group Inc. grew its holdings in shares of Paychex by 12.1% during the 4th quarter. Vanguard Group Inc. now owns 42,348,625 shares of the business services provider's stock worth $4,750,669,000 after purchasing an additional 4,583,157 shares during the period. Select Equity Group L.P. boosted its holdings in Paychex by 15.9% in the 2nd quarter. Select Equity Group L.P. now owns 4,051,413 shares of the business services provider's stock worth $589,319,000 after acquiring an additional 557,101 shares during the period. Dimensional Fund Advisors LP boosted its holdings in Paychex by 1.1% in the 3rd quarter. Dimensional Fund Advisors LP now owns 2,805,391 shares of the business services provider's stock worth $355,650,000 after acquiring an additional 31,321 shares during the period. Ameriprise Financial Inc. boosted its holdings in Paychex by 0.8% in the 2nd quarter. Ameriprise Financial Inc. now owns 2,280,715 shares of the business services provider's stock worth $330,908,000 after acquiring an additional 17,869 shares during the period. Finally, Envestnet Asset Management Inc. boosted its holdings in Paychex by 1.5% in the 3rd quarter. Envestnet Asset Management Inc. now owns 1,979,330 shares of the business services provider's stock worth $250,900,000 after acquiring an additional 30,117 shares during the period. Hedge funds and other institutional investors own 83.47% of the company's stock.

Paychex Stock Performance

Shares of PAYX opened at $92.85 on Wednesday. The business's 50 day moving average is $92.30 and its two-hundred day moving average is $104.09. Paychex, Inc. has a 52-week low of $85.45 and a 52-week high of $161.24. The firm has a market cap of $33.27 billion, a price-to-earnings ratio of 20.45 and a beta of 0.84. The company has a quick ratio of 1.26, a current ratio of 1.26 and a debt-to-equity ratio of 1.13.

Paychex (NASDAQ:PAYX - Get Free Report) last announced its earnings results on Wednesday, March 25th. The business services provider reported $1.71 earnings per share (EPS) for the quarter, beating analysts' consensus estimates of $1.67 by $0.04. Paychex had a return on equity of 48.52% and a net margin of 25.84%.The company had revenue of $1.81 billion for the quarter, compared to analyst estimates of $1.78 billion. During the same period in the prior year, the company posted $1.49 EPS. Paychex's quarterly revenue was up 19.9% on a year-over-year basis. Analysts forecast that Paychex, Inc. will post 5.5 EPS for the current fiscal year.

Paychex Increases Dividend

The company also recently declared a quarterly dividend, which will be paid on Friday, May 29th. Investors of record on Wednesday, May 13th will be given a dividend of $1.19 per share. The ex-dividend date of this dividend is Wednesday, May 13th. This represents a $4.76 annualized dividend and a dividend yield of 5.1%. This is an increase from Paychex's previous quarterly dividend of $1.08. Paychex's dividend payout ratio is currently 95.15%.

Paychex announced that its board has initiated a stock buyback plan on Friday, January 16th that permits the company to buyback $1.00 billion in outstanding shares. This buyback authorization permits the business services provider to purchase up to 2.5% of its shares through open market purchases. Shares buyback plans are often an indication that the company's management believes its stock is undervalued.

Analysts Set New Price Targets

A number of research firms have weighed in on PAYX. Citigroup decreased their price target on Paychex from $120.00 to $99.00 and set a "neutral" rating for the company in a report on Thursday, March 26th. TD Cowen decreased their price target on Paychex from $95.00 to $94.00 and set a "hold" rating for the company in a report on Tuesday, April 7th. UBS Group decreased their price target on Paychex from $98.00 to $94.00 and set a "neutral" rating for the company in a report on Monday, April 13th. Wells Fargo & Company decreased their price target on Paychex from $116.00 to $95.00 and set an "underweight" rating for the company in a report on Thursday, March 26th. Finally, BMO Capital Markets upped their target price on Paychex to $52.00 and gave the company an "outperform" rating in a research report on Thursday, March 26th. One research analyst has rated the stock with a Strong Buy rating, one has issued a Buy rating, twelve have issued a Hold rating and four have assigned a Sell rating to the company. According to MarketBeat.com, the stock currently has an average rating of "Reduce" and a consensus target price of $106.38.

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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