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Paycom (PAYC) Down 17.6% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Paycom Software (PAYC - Free Report) . Shares have lost about 17.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Paycom due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Paycom Q3 Earnings & Revenues Top Estimates, Up Y/Y
Paycom Software reported third-quarter 2021 results on Tuesday. This online payroll and human resource technology provider’s adjusted earnings of 92 cents per share beat the Zacks Consensus Estimate by a penny and jumped 31.4% year over year.
Quarter in Detail
The company generated revenues of $256.2 million, which increased 30.4% from the year-earlier period and surpassed the consensus mark of $250.4 million as well. This year-over-year upswing was mainly driven by the new client additions and continued focus on cross selling to the existing clients.
The adjusted gross profit climbed 28.8% from the year-ago period to $214.8 million. However, the adjusted gross margin contracted 110 basis points (bps) on a year-on-year basis to 83.8%, mainly on the workforce returning to offices as well as aggressive hiring.
Paycom Software’s adjusted EBITDA increased 32.9% year on year to $89.7 million. However, the adjusted EBITDA margin shrunk 210 bps to 35.9% chiefly due to a lower gross margin and increased investments in sales & marketing and research & development.
Balance Sheet & Cash Flow
Paycom Software exited the third quarter with cash and cash equivalents of $230.9 million compared with the $202.4 million recorded in the previous quarter.
The company’s balance sheet comprises net long-term debt of $27.8 million compared with the previous quarter’s $28.3 million.
Cash from operations was $83.2 million in the quarter. During the first-half of 2021, it generated an operating cash flow of $229.6 million.
Guidance
Buoyed by the better-than-expected third-quarter performance, Paycom Software raised its revenue and adjusted EBITDA outlook for full-year 2021. The company now forecasts 2021 revenues between $1.045 billion and $1.047 billion, up from the previous range of $1.036-$1.038 billion. The adjusted EBITDA projection has now been revised upward to $413-$415 million from the $410-$412 million anticipated earlier.
For the fourth quarter, Paycom Software estimates revenues to lie between $274.5 million and $276.5 million. Management projects an adjusted EBITDA of $103-$105 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, Paycom has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Paycom has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Paycom (PAYC) Down 17.6% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Paycom Software (PAYC - Free Report) . Shares have lost about 17.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Paycom due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Paycom Q3 Earnings & Revenues Top Estimates, Up Y/Y
Paycom Software reported third-quarter 2021 results on Tuesday. This online payroll and human resource technology provider’s adjusted earnings of 92 cents per share beat the Zacks Consensus Estimate by a penny and jumped 31.4% year over year.
Quarter in Detail
The company generated revenues of $256.2 million, which increased 30.4% from the year-earlier period and surpassed the consensus mark of $250.4 million as well. This year-over-year upswing was mainly driven by the new client additions and continued focus on cross selling to the existing clients.
The adjusted gross profit climbed 28.8% from the year-ago period to $214.8 million. However, the adjusted gross margin contracted 110 basis points (bps) on a year-on-year basis to 83.8%, mainly on the workforce returning to offices as well as aggressive hiring.
Paycom Software’s adjusted EBITDA increased 32.9% year on year to $89.7 million. However, the adjusted EBITDA margin shrunk 210 bps to 35.9% chiefly due to a lower gross margin and increased investments in sales & marketing and research & development.
Balance Sheet & Cash Flow
Paycom Software exited the third quarter with cash and cash equivalents of $230.9 million compared with the $202.4 million recorded in the previous quarter.
The company’s balance sheet comprises net long-term debt of $27.8 million compared with the previous quarter’s $28.3 million.
Cash from operations was $83.2 million in the quarter. During the first-half of 2021, it generated an operating cash flow of $229.6 million.
Guidance
Buoyed by the better-than-expected third-quarter performance, Paycom Software raised its revenue and adjusted EBITDA outlook for full-year 2021. The company now forecasts 2021 revenues between $1.045 billion and $1.047 billion, up from the previous range of $1.036-$1.038 billion. The adjusted EBITDA projection has now been revised upward to $413-$415 million from the $410-$412 million anticipated earlier.
For the fourth quarter, Paycom Software estimates revenues to lie between $274.5 million and $276.5 million. Management projects an adjusted EBITDA of $103-$105 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
VGM Scores
Currently, Paycom has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Paycom has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.