We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Paycom Software (PAYC) Up 8.8% Since Earnings Report: Can It Continue?
Read MoreHide Full Article
A month has gone by since the last earnings report for Paycom Software, Inc. (PAYC - Free Report) . Shares have added about 8.8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? 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 Software Q4 Earnings & Revenues Beat
Paycom Software’s fourth-quarter 2016 adjusted income per share (including stock-based compensation) came in at $0.15 per share, which beat the Zacks Consensus Estimate of $0.09 per share. Also, reported earnings increased from $0.09 per share earned in the year-ago quarter.
Quarter Details
Paycom Software reported revenues of $87.8 million, which increased 34.8% from the year-ago quarter. Revenues also beat the Zacks Consensus Estimate of $86 million. The year-over-over increase was driven by the addition of new clients and product development initiatives coupled with better-than-expected performance from Paycom's single database architecture.
Moreover, revenues were impacted positively by a 35.7% increase in recurring revenues, which more than offset 1.3% decline in implementation and other revenues on a year-over-year basis.
The company’s adjusted gross margin (including stock-based compensation) decreased 187 basis points (bps) on a year-over-year basis to 82.4%, primarily due to higher cost of sale.
Paycom Software’s adjusted operating margin (including stock-based compensation) increased from 9.6% reported in the year-ago quarter to 14.4%, primarily due to lower operating expenses as a percentage of revenues and higher revenue base. As a percentage of revenues, expenses decreased to 67.9% during the quarter from 74.5% reported in the year-ago period.
Adjusted net income (including stock-based compensation) came in at $8.6 million compared with $5.2 million reported in the year-ago quarter.
Balance Sheet & Cash Flow
Paycom Software exited the fourth quarter with cash and cash equivalents of $60.2 million compared with $74.5 million in the previous quarter. Receivables were $1.3 million compared with $1.5 million in the previous quarter.
Paycom Software’s balance sheet comprises long-term debt of $28.7 million compared with $29 million reported in the previous quarter. The company reported cash flow from operations of $98.9 million during the twelve-months ended Dec 31, 2016.
During the quarter, the company repurchased 634,506 shares under the $50 million share repurchase program.
Guidance
For the first quarter of fiscal 2017, Paycom Software expects revenues in a range of $114.5 million to $116.5 million. Adjusted EBITDA is expected to be approximately in a range of $42 million to $44 million.
Paycom Software provided fiscal 2017 guidance. The company expects revenues in a range of $422 million to $424 million. Adjusted EBITDA is expected to be approximately in a range of $113 million to $115 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There has been one upward revision for the current quarter.
At this time, Paycom Software's stock has a nice Growth Score of 'B', however its Momentum is doing a bit better with an 'A'. However, the stock was allocated a grade of 'F' on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our styles scores, the stock is more suitable momentum investors than growth investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of this revision also looks promising. Notably, the stock has a Zacks Rank #4 (Sell). We are expecting a below average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Paycom Software (PAYC) Up 8.8% Since Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Paycom Software, Inc. (PAYC - Free Report) . Shares have added about 8.8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? 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 Software Q4 Earnings & Revenues Beat
Paycom Software’s fourth-quarter 2016 adjusted income per share (including stock-based compensation) came in at $0.15 per share, which beat the Zacks Consensus Estimate of $0.09 per share. Also, reported earnings increased from $0.09 per share earned in the year-ago quarter.
Quarter Details
Paycom Software reported revenues of $87.8 million, which increased 34.8% from the year-ago quarter. Revenues also beat the Zacks Consensus Estimate of $86 million. The year-over-over increase was driven by the addition of new clients and product development initiatives coupled with better-than-expected performance from Paycom's single database architecture.
Moreover, revenues were impacted positively by a 35.7% increase in recurring revenues, which more than offset 1.3% decline in implementation and other revenues on a year-over-year basis.
The company’s adjusted gross margin (including stock-based compensation) decreased 187 basis points (bps) on a year-over-year basis to 82.4%, primarily due to higher cost of sale.
Paycom Software’s adjusted operating margin (including stock-based compensation) increased from 9.6% reported in the year-ago quarter to 14.4%, primarily due to lower operating expenses as a percentage of revenues and higher revenue base. As a percentage of revenues, expenses decreased to 67.9% during the quarter from 74.5% reported in the year-ago period.
Adjusted net income (including stock-based compensation) came in at $8.6 million compared with $5.2 million reported in the year-ago quarter.
Balance Sheet & Cash Flow
Paycom Software exited the fourth quarter with cash and cash equivalents of $60.2 million compared with $74.5 million in the previous quarter. Receivables were $1.3 million compared with $1.5 million in the previous quarter.
Paycom Software’s balance sheet comprises long-term debt of $28.7 million compared with $29 million reported in the previous quarter. The company reported cash flow from operations of $98.9 million during the twelve-months ended Dec 31, 2016.
During the quarter, the company repurchased 634,506 shares under the $50 million share repurchase program.
Guidance
For the first quarter of fiscal 2017, Paycom Software expects revenues in a range of $114.5 million to $116.5 million. Adjusted EBITDA is expected to be approximately in a range of $42 million to $44 million.
Paycom Software provided fiscal 2017 guidance. The company expects revenues in a range of $422 million to $424 million. Adjusted EBITDA is expected to be approximately in a range of $113 million to $115 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There has been one upward revision for the current quarter.
Paycom Software, Inc. Price and Consensus
Paycom Software, Inc. Price and Consensus | Paycom Software, Inc. Quote
VGM Scores
At this time, Paycom Software's stock has a nice Growth Score of 'B', however its Momentum is doing a bit better with an 'A'. However, the stock was allocated a grade of 'F' on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our styles scores, the stock is more suitable momentum investors than growth investors.
Outlook
Estimates have been trending upward for the stock. The magnitude of this revision also looks promising. Notably, the stock has a Zacks Rank #4 (Sell). We are expecting a below average return from the stock in the next few months.