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Tale of the Tape

Zacks Equity Research

Why the Earnings Streak Will Continue for Paylocity (PCTY)
September 26, 2016


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Looking for a stock that might be in a good position to beat earnings at its next report? Consider Paylocity Holding Corporation (PCTY - Snapshot Report) , a firm in the Internet Software industry, which could be a great candidate for another beat.

This company has seen a nice streak of beating earnings estimates, especially when looking at the previous two reports. In fact, in these reports, PCTY has beaten estimates by at least 15% in both cases, suggesting it has a nice short-term history of crushing expectations.

Earnings in Focus

Two quarters ago, PCTY expected to post earnings of 6 cents per share, while it actually produced earnings of 13 cents per share, a beat of 116.7%. Meanwhile, for the most recent quarter, the company looked to deliver a loss of 12 cents per share, when it actually reported loss of 10 cents per share instead, representing a 16.7% positive surprise.

PAYLOCITY HLDG Price and EPS Surprise



Thanks in part to this history, recent estimates have been moving higher for Paylocity. In fact, the Earnings ESP for PCTY is positive, which is a great sign of a coming beat.

After all, the Zacks Earnings ESP compares the most accurate estimate to the broad consensus, looking to find stocks that have seen big revisions as of late, suggesting that analysts have recently become more bullish on the company’s earnings prospects. This is the case for PCTY, as the firm currently has a Zacks Earnings ESP of 14.29%, so another beat could be around the corner.

This is particularly true when you consider that PCTY has a great Zacks Rank #1 (Strong Buy) which can be a harbinger of outperformance and a signal for a strong earnings profile. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

When you add this solid Zacks Rank to a positive Earnings ESP, a positive earnings surprise happens nearly 70% of the time, so it seems pretty likely that PCTY could see another beat at its next report, especially if recent trends are any guide.

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