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Paycom (PAYC) to Post Q4 Earnings: What's in the Cards?

Zacks Equity Research

Paycom Software PAYC is slated to release fourth-quarter 2019 results on Feb 5.

For the fourth quarter, the company expects revenues between $188.5 million to $190.5 million. The Zacks Consensus Estimate is pegged at $190.8 million, indicating a rise of 26.92% from the year-ago reported figure.

The Zacks Consensus Estimate for earnings stands at 77 cents, suggesting a 26.23% improvement from the year-earlier reported number.

Let’s see how things are shaping up for the upcoming announcement.

Factors at Play

Paycom’s fourth-quarter 2019 results are likely to have benefited from robust new business wins and the company’s high-margin recurring revenue business. Strong demand for its solutions across the market is likely to have been a key driver.

The company’s employee usage strategy, sales efforts and investments are likely to have boosted sales growth.

The differentiated product offering of Direct Data Exchange for all Paycom clients is expected to have aided customer additions. Moreover, the launch of Ask Here is also anticipated as a positive.

Further, Paycom’s growing foothold among larger companies makes us optimistic about its upcoming quarterly results.

Paycom Software, Inc. Price and EPS Surprise

Paycom Software, Inc. Price and EPS Surprise

Paycom Software, Inc. price-eps-surprise | Paycom Software, Inc. Quote

What Our Model Says

The proven Zacks model does not conclusively predict an earnings beat for Paycom this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Paycom’s Zacks Rank #3 and an Earnings ESP of 0.00% make surprise prediction difficult.

Highlights of Q3 Results and Surprise History

In the last reported quarter, it delivered non-GAAP earnings per share of 70 cents, which surpassed the Zacks Consensus Estimate of 69 cents and also grew 34% year over year.

Further, the company generated revenues of $175 million, surging 31% from the year-earlier period and also outpaced the Zacks Consensus Estimate of $172 million.

The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 5.57%.

Stocks to Consider

Here are some stocks worth considering as our model shows that these have the right combination of elements to beat on earnings in their upcoming releases:

Advanced Energy Industries, Inc. AEIS has an Earnings ESP of +10.80% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

CEVA CEVA has an Earnings ESP of +27.06% and is Zacks #1 Ranked.

Silicon Motion Technology Corporation SIMO has an Earnings ESP of +5.88% and is #1 Ranked.

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