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Paylocity (PCTY) to Report Q4 Earnings: What's in Store?

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Paylocity Holding Corporation (PCTY - Free Report) is scheduled to report fourth-quarter fiscal 2018 results on Aug 9.

Notably, the company beat estimates in each of the trailing four quarters, delivering an average positive surprise of 220.08%.

In the last reported quarter, the company came up with a positive earnings surprise of 10.64%. Revenues also beat the Zacks Consensus Estimate and improved year over year.

For the fiscal fourth quarter, Paylocity expects revenues in the range of $92.6-$93.6 million.

The Zacks Consensus Estimate is pegged at $93.15 million for revenues and at 12 cents for earnings. The revenues and earnings per share are expected to witness a year-over-year growth of 22.47% and 33.33% respectively.

Let's see how things are shaping up for the upcoming announcement.

Factors Likely to Drive Results

Paylocity is performing well backed by the robust performance of its HCM (Human Capital Management) product suite which has resulted in new client additions.

In the last few quarters, a significant portion of revenues was generated from clients moving from traditional payroll service providers to the company’s SaaS-based services. This trend is expected to remain accretive to revenues in the fiscal fourth quarter as well.

Recurring revenues, which constituted 95.7% of total revenues in the last reported quarter, is likely to continue its uptrend.

Paylocity’s results will continue to benefit from an enriched portfolio. In the last reported quarter, Paylocity completed the acquisition of BeneFLEX, which expanded its product suite further with a host of benefit administration related solutions

Nonetheless, competition in the payroll processing sector from existing players like Paychex, Inc., (PAYX - Free Report) and Oracle Corporation (ORCL - Free Report) among others remains a pressure on the top line. Increasing competition from new entrants also pose a threat. These factors are expected to increase pricing pressure and affect Paylocity’s margins.

What the Zacks Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Paylocity has a Zacks Rank #3 and an Earnings ESP of 0.00%.

A Stock to Consider

Here is a stock that you may consider as our model shows that this has the right combination of elements to post an earnings beat in their upcoming releases:

Science Applications (SAIC - Free Report) with an Earnings ESP of +1.70% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

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