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PAYC anticipates third-quarter revenues in the range of $444-$449 million. The Zacks Consensus Estimate for revenues is pegged at $446.9 million, suggesting a rise of approximately 10% from the year-ago quarter’s sales of $406.3 million. The consensus mark for earnings is pinned at $1.62 per share, indicating a year-over-year decline of 8.5%. The consensus estimate for the bottom line has been revised downward by a penny in the past seven days.
Adjusted EBITDA for the third quarter is expected to be in the range of $155-$159 million, suggesting an adjusted EBITDA margin of approximately 35% at the midpoint of the range.
Paycom’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 6.7%.
Paycom’s third-quarter performance is likely to have benefited from expanding client base through its latest product innovations and high-margin recurring revenue business model. The enhancement of its offerings through artificial intelligence (AI) implementation is likely to have gained new clients, driving the company’s revenues. Our estimate for PAYC’s recurring revenues is pegged at $437.3 million, suggesting year-over-year growth of 9.7%.
PAYC’s continuous efforts in employee usage strategy, sales, and investments in areas of AI, automation, international expansion, and value proposition for its client might have boosted its sales growth in the third quarter of 2024.
Paycom’s focus on adding more functionality to its Beti and GONE solutions, while delivering a seamless employee experience, enables it to add prospective clients to its existing user base. Notably, Beti facilitates all employees to manage their payroll requirements, including tracking hours worked for employees, calculating their pay, and distributing payments via direct deposit or checks, while GONE takes care of time-off requests.
However, Paycom’s third-quarter performance is likely to have been hurt by headcount reductions across its client base due to an uncertain macroeconomic environment. Growing slowdown concerns amid the ongoing macroeconomic challenges and geopolitical issues might have resulted in significant headcount reductions across the company’s client base. The condition has been affecting PAYC’s business due to lower transaction volumes or loss of clients. Potential clients tend to lower their overall spending on payroll and other human capital management services.
What Our Model Says About Paycom
According to the Zacks model, the combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
PAYC has an Earnings ESP of -0.35% and a Zacks Rank #4 (Sell) at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are some stocks worth considering, as our model shows that they have the right combination of elements to beat on earnings this reporting cycle.
Arista Networks’ shares have surged 68.1% year to date. It is slated to report its third-quarter 2024 results on Nov. 7.
The Zacks Consensus Estimate for ANET’s third-quarter 2024 earnings is pegged at $2.08 per share, unchanged over the past 60 days. This suggests an improvement of 13.7% from the year-ago quarter’s reported figure.
Onto Innovation (ONTO - Free Report) has an Earnings ESP of +2.74% and a Zacks Rank #2 at present.
ONTO shares have gained 32.7% year to date. It is slated to release third-quarter 2024 results on Oct. 31.
The Zacks Consensus Estimate for ONTO’s earnings is pegged at $1.31 per share, up by a couple of pennies over the past 60 days. This indicates growth of 36.5% from the year-ago quarter’s reported figure.
Meta Platforms (META - Free Report) has an Earnings ESP of +2.83% and a Zacks Rank #2 at present. META’s shares have gained 60.4% year to date. It is set to report third-quarter 2024 results on Oct. 30.
The Zacks Consensus Estimate for META’s third-quarter 2024 earnings is pegged at $5.17 per share, up by a couple of pennies for the past 60 days, indicating an improvement of 17.8% from the year-ago quarter’s reported figure.
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Paycom Set to Report Q3 Earnings: What's in Store for the Stock?
Paycom Software (PAYC - Free Report) is scheduled to report third-quarter 2024 results after market close on Oct. 30.
PAYC anticipates third-quarter revenues in the range of $444-$449 million. The Zacks Consensus Estimate for revenues is pegged at $446.9 million, suggesting a rise of approximately 10% from the year-ago quarter’s sales of $406.3 million. The consensus mark for earnings is pinned at $1.62 per share, indicating a year-over-year decline of 8.5%. The consensus estimate for the bottom line has been revised downward by a penny in the past seven days.
Adjusted EBITDA for the third quarter is expected to be in the range of $155-$159 million, suggesting an adjusted EBITDA margin of approximately 35% at the midpoint of the range.
Paycom’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 6.7%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Paycom Software, Inc. Price and EPS Surprise
Paycom Software, Inc. price-eps-surprise | Paycom Software, Inc. Quote
Factors to Consider for PAYC
Paycom’s third-quarter performance is likely to have benefited from expanding client base through its latest product innovations and high-margin recurring revenue business model. The enhancement of its offerings through artificial intelligence (AI) implementation is likely to have gained new clients, driving the company’s revenues. Our estimate for PAYC’s recurring revenues is pegged at $437.3 million, suggesting year-over-year growth of 9.7%.
PAYC’s continuous efforts in employee usage strategy, sales, and investments in areas of AI, automation, international expansion, and value proposition for its client might have boosted its sales growth in the third quarter of 2024.
Paycom’s focus on adding more functionality to its Beti and GONE solutions, while delivering a seamless employee experience, enables it to add prospective clients to its existing user base. Notably, Beti facilitates all employees to manage their payroll requirements, including tracking hours worked for employees, calculating their pay, and distributing payments via direct deposit or checks, while GONE takes care of time-off requests.
However, Paycom’s third-quarter performance is likely to have been hurt by headcount reductions across its client base due to an uncertain macroeconomic environment. Growing slowdown concerns amid the ongoing macroeconomic challenges and geopolitical issues might have resulted in significant headcount reductions across the company’s client base. The condition has been affecting PAYC’s business due to lower transaction volumes or loss of clients. Potential clients tend to lower their overall spending on payroll and other human capital management services.
What Our Model Says About Paycom
According to the Zacks model, the combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
PAYC has an Earnings ESP of -0.35% and a Zacks Rank #4 (Sell) at present. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are some stocks worth considering, as our model shows that they have the right combination of elements to beat on earnings this reporting cycle.
Arista Networks (ANET - Free Report) has an Earnings ESP of +0.96% and carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arista Networks’ shares have surged 68.1% year to date. It is slated to report its third-quarter 2024 results on Nov. 7.
The Zacks Consensus Estimate for ANET’s third-quarter 2024 earnings is pegged at $2.08 per share, unchanged over the past 60 days. This suggests an improvement of 13.7% from the year-ago quarter’s reported figure.
Onto Innovation (ONTO - Free Report) has an Earnings ESP of +2.74% and a Zacks Rank #2 at present.
ONTO shares have gained 32.7% year to date. It is slated to release third-quarter 2024 results on Oct. 31.
The Zacks Consensus Estimate for ONTO’s earnings is pegged at $1.31 per share, up by a couple of pennies over the past 60 days. This indicates growth of 36.5% from the year-ago quarter’s reported figure.
Meta Platforms (META - Free Report) has an Earnings ESP of +2.83% and a Zacks Rank #2 at present. META’s shares have gained 60.4% year to date. It is set to report third-quarter 2024 results on Oct. 30.
The Zacks Consensus Estimate for META’s third-quarter 2024 earnings is pegged at $5.17 per share, up by a couple of pennies for the past 60 days, indicating an improvement of 17.8% from the year-ago quarter’s reported figure.