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Paylocity Holding's (NASDAQ:PCTY) Wonderful 420% Share Price Increase Shows How Capitalism Can Build Wealth

Simply Wall St

Buying shares in the best businesses can build meaningful wealth for you and your family. And we've seen some truly amazing gains over the years. To wit, the Paylocity Holding Corporation (NASDAQ:PCTY) share price has soared 420% over five years. This just goes to show the value creation that some businesses can achieve. It's also good to see the share price up 12% over the last quarter.

View our latest analysis for Paylocity Holding

While Paylocity Holding made a small profit, in the last year, we think that the market is probably more focussed on the top line growth at the moment. Generally speaking, we'd consider a stock like this alongside loss-making companies, simply because the quantum of the profit is so low. It would be hard to believe in a more profitable future without growing revenues.

In the last 5 years Paylocity Holding saw its revenue grow at 28% per year. Even measured against other revenue-focussed companies, that's a good result. Arguably, this is well and truly reflected in the strong share price gain of 39%(per year) over the same period. Despite the strong run, top performers like Paylocity Holding have been known to go on winning for decades. So we'd recommend you take a closer look at this one, but keep in mind the market seems optimistic.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

NasdaqGS:PCTY Income Statement, July 24th 2019

Paylocity Holding is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. If you are thinking of buying or selling Paylocity Holding stock, you should check out this free report showing analyst consensus estimates for future profits.

A Different Perspective

It's good to see that Paylocity Holding has rewarded shareholders with a total shareholder return of 65% in the last twelve months. That gain is better than the annual TSR over five years, which is 39%. Therefore it seems like sentiment around the company has been positive lately. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.

But note: Paylocity Holding may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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 editorial-team@simplywallst.com. 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.