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Factors Likely to Decide Paycom's (PAYC) Fate in Q1 Earnings

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Paycom Software (PAYC - Free Report) is slated to report first-quarter 2022 results on May 3.

The company projects first-quarter revenues between $342 million and $344 million. The Zacks Consensus Estimate for revenues is pegged at $343.3 million, indicating an increase of 26.1% year over year. The consensus mark for earnings stands at $1.76 per share, suggesting a 19.7% rise from the prior-year quarter.

Paycom estimates adjusted EBITDA in the range of $161 million to $163 million for first-quarter 2022. The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 6.1%.

Paycom Software, Inc. Price and EPS Surprise Paycom Software, Inc. Price and EPS Surprise

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

Factors to Note

Paycom’s first-quarter performance is likely to have benefited from strong demand of latest products, new business wins and the high-margin recurring revenue business. The company’s employee usage strategy, sales efforts and investments might have boosted sales growth during the period in discussion.

The cloud-based human capital management solution provider had earlier announced its intention to aggressively drive advertising and marketing efforts to generate more demo leads, virtual meetings and increased close rates of deals. This is likely to have led to further market share gains for Paycom.

The company expects strong adoption of BETI solution — an industry-first technology that empowers employees to do their own payroll — among its clients aiding them to avoid time-consuming manual checks. Paycom anticipates new client additions to have driven the top line in the first quarter. It estimates effective tax rate to be approximately 30% in the to-be-reported quarter.

However, pandemic-triggered economic and business disruptions might have weighed on Paycom’s first-quarter performance. Some of the company’s businesses are directly related to the number of headcounts at its client offices.

Moreover, form filing might have been negatively impacted by the reduced workforce in industries hit hardest by the pandemic, coupled with a lower turnover in those industries.

What Our Model Unveils

Our proven model does not conclusively predict an earnings beat for PAYC this season. The combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.

Paycom currently carries a Zacks Rank of #3 and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Stocks With Favorable Combination

Per our model, ConocoPhillips (COP - Free Report) , Sony (SONY - Free Report) and Fortive (FTV - Free Report) have the right combination of elements to post an earnings beat in their upcoming releases.

ConocoPhillips is slated to report first-quarter 2022 results on May 5. The company has a Zacks Rank #1 and an Earnings ESP of +6.47% at present. COP's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 12.6%. You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for quarterly earnings is pegged at $3.04 per share, suggesting a whopping year-over-year surge of 340.6%. ConocoPhillips' quarterly revenues are estimated to increase 48.6% year over year to $15.69 billion.

Sony has a Zacks Rank #3 and an Earnings ESP of +12.96%. The company is scheduled to report fourth-quarter fiscal 2022 results on Apr 27. Sony's earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 51.4%.

The Zacks Consensus Estimate for SONY's fourth-quarter earnings is pegged at 82 cents per share, indicating a year-over-year increase of 1.23%. The consensus mark for revenues stands at $20.82 billion, suggesting a year-over-year decline of 0.65%.

Fortive currently has a Zacks Rank #3 and an Earnings ESP of +0.30%. The company is slated to report its first-quarter 2022 results on Apr 28. Fortive's earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 4%.

The Zacks Consensus Estimate for Fortive's first-quarter earnings stands at 68 cents per share, suggesting a year-over-year increase of 7.9%. FTV anticipates revenues of $1.35 billion, which suggests growth of 7.1% from the year-ago quarter.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.