Paycom Software (PAYC) Q4 Earnings: What's in the Cards?
Paycom Software, Inc. PAYC is set to report fourth-quarter 2016 results on Feb 8. The company has posted an average earnings surprise of 30.19%. Let us see how things are shaping up for this announcement.
Factors at Play
Paycom Software reported not-so-encouraging third-quarter 2016 results. While the top line beat the Zacks Consensus Estimate by a slight margin, in terms of the bottom line, the company posted a loss, which compared unfavorably with the consensus mark. However, revenues increased on a year-over-year basis.
Revenue growth seems to be steady and was positively impacted by higher recurring revenues and higher traction in cloud-based offerings. Better-than-expected demand for advanced human capital management and payroll software solutions during the reported quarter were the other positives.
We believe that the higher adoption of Paycom Software’s Affordable Care Act (“ACA”) dashboard application that tracks employee count, employee status and health care plan affordability are positives for the company.
Nevertheless, competition from companies like Paylocity Holding Corporation PCTY, Intuit Inc. and Paychex, Inc. remains a headwind.
Earnings Whispers
Our proven model does not conclusively show that Paycom Software will beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.
Zacks ESP: Earnings ESP for Paycom Softwareis 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 9 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Paycom Softwarehas a Zacks Rank #3, which when combined with an ESP of 0.00%, makes surprise prediction difficult.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are a couple of companies which you may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
CVS Health Corporation CVS, with an Earnings ESP of +0.60% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Moody's Corporation MCO, with an Earnings ESP of +0.89% and a Zacks Rank #3
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Moody's Corporation (MCO): Free Stock Analysis Report
Paycom Software, Inc. (PAYC): Free Stock Analysis Report
CVS Health Corporation (CVS): Free Stock Analysis Report
Paylocity Holding Corporation (PCTY): Free Stock Analysis Report
To read this article on Zacks.com click here.
