Paychex (NASDAQ:PAYX) Stock Falls 5.4% - Here's What Happened

Key Points

• Paychex shares fell 5.4% to about $109.50 in mid-day trading, with volume running roughly 50% below the stock’s average daily volume.
• Analysts maintain a broadly cautious outlook: Paychex has a consensus “Hold” rating and an average price target of $127.59, despite some firms issuing higher targets or buy ratings.
• The company exceeded quarterly EPS expectations, reporting $1.34 versus $1.32 expected, while revenue rose 5.9% year over year to $1.63 billion. Paychex also declared a $1.19 quarterly dividend, representing a 4.3% annualized yield.

Paychex, Inc. (NASDAQ:PAYX - Get Free Report)'s stock price dropped 5.4% during mid-day trading on Tuesday. The company traded as low as $109.67 and last traded at $109.4970. Approximately 1,713,907 shares changed hands during mid-day trading, a decline of 50% from the average daily volume of 3,449,825 shares. The stock had previously closed at $115.70.

Wall Street Analysts Forecast Growth

A number of equities research analysts have recently commented on the company. BMO Capital Markets dropped their price target on Paychex from $118.00 to $113.00 and set a "market perform" rating on the stock in a research report on Thursday, September 24th. Bank of America decreased their price objective on Paychex from $450.00 to $225.00 in a research report on Wednesday, July 15th. JPMorgan Chase & Co. raised Paychex from an "underweight" rating to a "neutral" rating and increased their target price for the stock from $105.00 to $115.00 in a research note on Thursday, September 24th. Stifel Nicolaus lowered their target price on Paychex from $130.00 to $112.00 and set a "hold" rating for the company in a research note on Thursday, September 24th. Finally, Citigroup raised their target price on shares of Paychex from $140.00 to $150.00 and gave the stock a "buy" rating in a report on Thursday, July 30th. One research analyst has rated the stock with a Strong Buy rating, two have issued a Buy rating, thirteen have issued a Hold rating and two have assigned a Sell rating to the stock. According to data from MarketBeat.com, the company currently has a consensus rating of "Hold" and a consensus target price of $127.59.

Paychex Stock Performance

The stock has a market capitalization of $38.98 billion, a price-to-earnings ratio of 21.71, a price-to-earnings-growth ratio of 2.48 and a beta of 0.86. The company has a current ratio of 1.28, a quick ratio of 1.28 and a debt-to-equity ratio of 1.23. The stock's 50 day moving average is $113.83 and its two-hundred day moving average is $103.64.

Paychex (NASDAQ:PAYX - Get Free Report) last released its earnings results on Wednesday, September 23rd. The business services provider reported $1.34 earnings per share (EPS) for the quarter, topping analysts' consensus estimates of $1.32 by $0.02. Paychex had a return on equity of 52.78% and a net margin of 27.35%. The firm had revenue of $1.63 billion during the quarter, compared to analysts' expectations of $1.63 billion. The company's revenue was up 5.9% on a year-over-year basis. During the same quarter in the prior year, the company earned $1.22 EPS. Paychex has set its FY 2027 guidance at 5.896-6.006 EPS. Analysts expect that Paychex, Inc. will post 5.96 earnings per share for the current fiscal year.

Paychex Announces Dividend

The firm also recently disclosed a quarterly dividend, which will be paid on Wednesday, November 25th. Stockholders of record on Monday, October 26th will be issued a $1.19 dividend. The ex-dividend date is Monday, October 26th. This represents a $4.76 dividend on an annualized basis and a dividend yield of 4.3%. Paychex's dividend payout ratio (DPR) is 94.44%.

Insider Activity at Paychex

In related news, Director Joseph Velli sold 7,839 shares of the stock in a transaction on Wednesday, October 14th. The shares were sold at an average price of $107.68, for a total transaction of $844,103.52. Following the completion of the transaction, the director owned 81,725 shares in the company, valued at approximately $8,800,148. This represents a 8.75% decrease in their ownership of the stock. The sale was disclosed in a document filed with the SEC, which can be accessed through this hyperlink. 0.60% of the stock is currently owned by corporate insiders.

Institutional Investors Weigh In On Paychex

Several hedge funds and other institutional investors have recently added to or reduced their stakes in PAYX. XXEC Inc. acquired a new position in shares of Paychex during the 2nd quarter worth about $1,123,016,000. BlackRock Inc. bought a new stake in Paychex during the second quarter worth about $2,728,970,000. Bank of America Corp DE bought a new stake in Paychex during the second quarter worth about $434,061,000. Legal & General Group Plc bought a new stake in Paychex during the second quarter worth about $207,184,000. Finally, Bank of New York Mellon Corp acquired a new position in Paychex during the second quarter valued at approximately $193,555,000. 83.47% of the stock is currently owned by institutional investors and hedge funds.

About Paychex

Paychex, Inc provides payroll, human resources and employee-benefits solutions to small and medium-sized businesses. Its offerings include payroll processing, tax administration, time and attendance management, recruiting, onboarding, human resources administration, compliance support and employee benefits services.

The company also provides retirement-plan services, insurance solutions and professional employer organization services. Through its software and outsourced services, Paychex helps employers manage workforce administration, employee data and regulatory requirements.

Paychex was founded in 1971 by B.

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