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What's in the Cards for Paylocity (PCTY) in Q2 Earnings?

Zacks Equity Research

Paylocity Holding Corporation PCTY is slated to release second-quarter fiscal 2018 results on Feb 8. The question lingering on investors’ minds is if this provider of cloud-based payroll and human capital management (HCM) software solutions will be able to deliver a positive surprise.

Notably, Paylocity has a solid earnings surprise history. The stock surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average positive surprise of 285.9%.

Let’s see how things are shaping up prior to this announcement.

What to Expect?

The Zacks Consensus Estimate for the second quarter earnings is pegged at 12 cents per share. This indicates a year-over-year increase of 20%. Additionally, analysts polled by Zacks project revenues of roughly $84.94 billion, showcasing 23.7% growth from the year-ago quarter actual figure.

Factors to Consider

The company enriched its portfolio during the quarter with two additions namely, “Compensation Management and Surveys”. While Compensation Management is aimed at improving the process of rewarding employees, Surveys will be assisting in increasing organizational communication for gaining employee feedback.

The company’s Software as a Service (SaaS) based human capital management (HCM) services are anticipated to boost the top line. SaaS HCM solutions that minimize data integrity issues across applications and ease implementations compared to those offered by traditional software providers are being adopted by organizations on a large scale.

In the last few quarters, clients moving from traditional payroll service providers to the company’s SaaS-based services contributed significantly to its revenues. Hence, we remain positive about Paylocity’s regular investments in SaaS technology. Moreover, accelerated adoption of Paylocity’s Affordable Care Act (ACA) dashboard application will be another positive.

Paylocity Holding Corporation Price and EPS Surprise

Paylocity Holding Corporation Price and EPS Surprise | Paylocity Holding Corporation Quote

Zacks Rank and Stocks to Consider

Paylocity has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are Lam Research Corporation LRCX, The Trade Desk Inc. TTD and Micron Technology, Inc. MU all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term EPS growth rate for Lam Research, The Trade Desk and Micron is projected to be 14.9%, 25% and 10%, respectively.

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