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Paylocity (PCTY) to Post Q1 Earnings: What's in the Cards?

Zacks Equity Research

Paylocity PCTY is set to report first-quarter fiscal 2020 results on Oct 30.

For first-quarter fiscal 2020, Paylocity projects revenues in the range of $123.5-$124.5 million, indicating 23-24% growth from the year-ago reported figure.

The Zacks Consensus Estimate for revenues is pegged at $124.12 million, indicating growth of 23.5% from the year-earlier reported figure. The Zacks Consensus Estimate for earnings stands at 27 cents, implying a 35% rise from the prior-year reported number.

Although the company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, the same missed the mark once, the average positive surprise being 9.37%.

In the last reported quarter, the company’s earnings of 34 cents per share topped the Zacks Consensus Estimate of 25 cents and were also way higher than the year-ago quarter’s 11 cents.

Additionally, Paylocity’s revenues of $120 million improved 25% year over year and also trumped the Zacks Consensus Estimate of $117 million.

Paylocity Holding Corporation Price and EPS Surprise

Paylocity Holding Corporation Price and EPS Surprise

Paylocity Holding Corporation price-eps-surprise | Paylocity Holding Corporation Quote

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

Factors at Play

Paylocity’s first-quarter fiscal 2020 results are likely to reflect its robust product portfolio, which is helping it expand its clientele.

Growing adoption of its HCM solutions among clients with less than 50 employees is likely to have remained a key driver. Moreover, a healthy momentum in the company’s core and upper end of the market is also a tailwind.

Further, the release of Learning Management System, which garnered a positive feedback from clients, is encouraging. Also, the addition of on-demand pay to its portfolio is likely to have boosted client wins in the soon-to-be-reported quarter.

For the last few quarters, clients shifting from traditional payroll service providers to the company’s SaaS-based services contributed significantly to its revenues. This is likely to have remained an upside in the third quarter as well.

What Our Model Says

The proven Zacks model does not conclusively predict an earnings beat for Paylocity 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.

Paylocity’s Zacks Rank #2 and an Earnings ESP of 0.00% make surprise prediction difficult.

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 +4.17% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

MeetMe, Inc. MEET has an Earnings ESP of +4.17% and a Zacks Rank of 2.

DHI Group, Inc. DHX has an Earnings ESP of +9.09% and a Zacks Rank #3.

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