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In March 2019, Paylocity Holding Corporation (NASDAQ:PCTY) announced its earnings update. Overall, it seems that analyst forecasts are fairly optimistic, with earnings expected to grow by 46% in the upcoming year, though this is relatively lower than the past 5-year average earnings growth of 76%. With trailing-twelve-month net income at current levels of US$39m, we should see this rise to US$56m in 2020. Below is a brief commentary on the longer term outlook the market has for Paylocity Holding. For those interested in more of an analysis of the company, you can research its fundamentals here.
What can we expect from Paylocity Holding in the longer term?
The 17 analysts covering PCTY view its longer term outlook with a positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
From the current net income level of US$39m and the final forecast of US$87m by 2022, the annual rate of growth for PCTY’s earnings is 21%. This leads to an EPS of $1.56 in the final year of projections relative to the current EPS of $0.74. In 2022, PCTY's profit margin will have expanded from 10% to 13%.
Future outlook is only one aspect when you're building an investment case for a stock. For Paylocity Holding, there are three pertinent aspects you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Paylocity Holding worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Paylocity Holding is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Paylocity Holding? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.