Paylocity Holding Corporation (PCTY - Free Report) is set to report fourth-quarter 2017 results on Aug 10. Last quarter, the company posted a positive earnings surprise of 133.3%. Let's see how things are shaping prior to this announcement.
Factors at Play
Paylocity’s both top and bottom-lines for the third quarter increased year over year. The company also raised fiscal 2017 guidance.
We remain positive about Paylocity’s regular investments in SaaS technology. Notably in the last few quarters, clients switching from traditional payroll service providers to the company’s SaaS-based services generated a significant portion of its revenues. Therefore, we believe that regular investments in technological upgrades, along with product innovations, will continue to boost the company’s top-line in the long run. Such initiatives are also likely to have positive impact on forthcoming results.
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 Corporation and SAP SE remain major headwinds.
Paylocity Holding Corporation Price and EPS Surprise
Our proven model does not conclusively show that Paylocity will beat earnings estimates 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: Paylocity ESP is 0.00% since both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 10 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Paylocity’s Zacks Rank #3 when combined with a 0.00% ESP 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 witnessing negative estimate revisions.
Stocks to Consider
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
CACI International, Inc. (CACI - Free Report) , with an Earnings ESP of +1.83% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Broadcom Limited (AVGO - Free Report) , with an Earnings ESP of +2.57% and a Zacks Rank #2.
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