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Why Is Paycom (PAYC) Down 10.1% Since Last Earnings Report?
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It has been about a month since the last earnings report for Paycom Software (PAYC - Free Report) . Shares have lost about 10.1% 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 Q4 Earnings and Revenues Surpass Estimates
Paycom ended 2022 on a strong note by delivering solid fourth-quarter results, wherein the top and bottom lines surpassed the respective Zacks Consensus Estimate and rose year over year.
The online payroll and human resource technology provider reported non-GAAP earnings of $1.73 per share, beating the Zacks Consensus Estimate of $1.46. The bottom line improved 55.9% from the $1.11 per share reported in the year-ago quarter.
For the fourth quarter of 2022, Paycom reported revenues of $370.6 million, beating the consensus mark of $367.1 million and improving 30% year over year. This year-over-year upside was primarily driven by strong demand, new business wins and the adoption of recent new product offerings.
Quarter in Detail
Paycom’s recurring revenues (representing 98.2% of the total revenues) improved 30% to $364 million in the fourth quarter.
Adjusted gross profits climbed 30.4% from the year-ago period to $312.5 million. Moreover, the adjusted gross margin expanded 20 basis points (bps) on a year-over-year basis to 84.3%.
Paycom’s adjusted EBITDA increased 49.6% year over year to $163.9 million. The adjusted EBITDA margin expanded 580 bps to 44.2%.
Balance Sheet & Cash Flow
Paycom exited the fourth quarter with cash and cash equivalents of $400.7 million compared with the $317.2 million recorded in the previous quarter. The company’s balance sheet comprised net long-term debt of $29 million, which remained flat sequentially.
In the fourth quarter of 2022, PAYC generated operating cash flow of $128.5 million. During the full-year 2022, the company generated $365.1 million worth of operating cash flow.
Guidance
For the first quarter of 2023, Paycom forecasts revenues and adjusted EBITDA in the ranges of $443-$445 million and $210-$212 million, respectively.
For the full-year 2023, Paycom forecasts revenues and adjusted EBITDA in the ranges of $1.700-$1.702 billion and $700-$702 million, respectively.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, Paycom has a nice Growth Score of B, a grade with the same score on the momentum front. However, 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 C. 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.
Performance of an Industry Player
Paycom belongs to the Zacks Internet - Software industry. Another stock from the same industry, Aspen Technology (AZPN - Free Report) , has gained 3.5% over the past month. More than a month has passed since the company reported results for the quarter ended December 2022.
Aspen Technology reported revenues of $242.84 million in the last reported quarter, representing a year-over-year change of +41.7%. EPS of $0.35 for the same period compares with $1.20 a year ago.
For the current quarter, Aspen Technology is expected to post earnings of $1.66 per share, indicating a change of +20.3% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.4% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Aspen Technology. Also, the stock has a VGM Score of D.
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Why Is Paycom (PAYC) Down 10.1% Since Last Earnings Report?
It has been about a month since the last earnings report for Paycom Software (PAYC - Free Report) . Shares have lost about 10.1% 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 Q4 Earnings and Revenues Surpass Estimates
Paycom ended 2022 on a strong note by delivering solid fourth-quarter results, wherein the top and bottom lines surpassed the respective Zacks Consensus Estimate and rose year over year.
The online payroll and human resource technology provider reported non-GAAP earnings of $1.73 per share, beating the Zacks Consensus Estimate of $1.46. The bottom line improved 55.9% from the $1.11 per share reported in the year-ago quarter.
For the fourth quarter of 2022, Paycom reported revenues of $370.6 million, beating the consensus mark of $367.1 million and improving 30% year over year. This year-over-year upside was primarily driven by strong demand, new business wins and the adoption of recent new product offerings.
Quarter in Detail
Paycom’s recurring revenues (representing 98.2% of the total revenues) improved 30% to $364 million in the fourth quarter.
Adjusted gross profits climbed 30.4% from the year-ago period to $312.5 million. Moreover, the adjusted gross margin expanded 20 basis points (bps) on a year-over-year basis to 84.3%.
Paycom’s adjusted EBITDA increased 49.6% year over year to $163.9 million. The adjusted EBITDA margin expanded 580 bps to 44.2%.
Balance Sheet & Cash Flow
Paycom exited the fourth quarter with cash and cash equivalents of $400.7 million compared with the $317.2 million recorded in the previous quarter. The company’s balance sheet comprised net long-term debt of $29 million, which remained flat sequentially.
In the fourth quarter of 2022, PAYC generated operating cash flow of $128.5 million. During the full-year 2022, the company generated $365.1 million worth of operating cash flow.
Guidance
For the first quarter of 2023, Paycom forecasts revenues and adjusted EBITDA in the ranges of $443-$445 million and $210-$212 million, respectively.
For the full-year 2023, Paycom forecasts revenues and adjusted EBITDA in the ranges of $1.700-$1.702 billion and $700-$702 million, respectively.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, Paycom has a nice Growth Score of B, a grade with the same score on the momentum front. However, 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 C. 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.
Performance of an Industry Player
Paycom belongs to the Zacks Internet - Software industry. Another stock from the same industry, Aspen Technology (AZPN - Free Report) , has gained 3.5% over the past month. More than a month has passed since the company reported results for the quarter ended December 2022.
Aspen Technology reported revenues of $242.84 million in the last reported quarter, representing a year-over-year change of +41.7%. EPS of $0.35 for the same period compares with $1.20 a year ago.
For the current quarter, Aspen Technology is expected to post earnings of $1.66 per share, indicating a change of +20.3% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.4% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Aspen Technology. Also, the stock has a VGM Score of D.