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Paylocity Holding (PCTY) Q2 Earnings: What's in the Cards?

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Paylocity Holding Corporation (PCTY - Free Report) is set to report second-quarter fiscal 2017 results on Feb 2. Last quarter, the company recorded a positive earnings surprise of 42.9%. Let’s see how things are shaping up for this quarter.

Factors to Consider

We remain positive about Paylocity’s regular investments in SaaS technology. Notably, over the past few quarters, clients moving from traditional payroll service providers to the company’s SaaS-based services generated a significant portion of Paylocity’s revenues. Therefore, we believe that regular investments in technological upgrades, along with product innovations, will continue to boost the company’s top line.

Furthermore, higher adoption of Paylocity’s ACA dashboard application, which specializes in tracking employee count, employee status and health care plan affordability, will act as a tailwind.

However, competition in the payroll processing sector from new entrants as well as existing players such as Automatic Data Processing, Inc. (ADP - Free Report) , Oracle Corp. and SAP SE remains a major headwind.

Paylocity Holding Corporation Price and EPS Surprise

Earnings Whispers

Our proven model does not conclusively show that Paylocity Holdingwill beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.

Zacks ESP: Earnings ESP for Paylocity Holdingis 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 8 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Paylocity Holding has a Zacks Rank #3, which when combined with an ESP of 0.00%, makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a couple of companies which you may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

CVS Health Corp. (CVS - Free Report) , with an Earnings ESP of +0.60% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Moody's Corp. (MCO - Free Report) , with an Earnings ESP of +0.89% and a Zacks Rank #3.

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