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Paycom (PAYC) to Report Q1 Earnings: What's in the Offing?

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Paycom Software (PAYC - Free Report) is slated to release first-quarter 2020 results on Apr 28.

For the first quarter, the company expects revenues between $240 million and $242 million. The Zacks Consensus Estimate is pegged at $238.5 million, indicating a rise of 19.3% from the year-ago reported figure.

The Zacks Consensus Estimate for earnings is pegged at $1.27, suggesting a 6.7% year-over-year improvement.

Let’s see how things have shaped up for the upcoming announcement.

Key Factors

The coronavirus outbreak, which has disrupted economic and business activities globally, is likely to have had a minimal impact on Paycom’s first-quarter performance. This is because the pandemic began disrupting economic and business activities at large by the end of the quarter, more precisely since mid-March.

Paycom’s quarterly performance is likely to have benefited from robust new business wins and the company’s high-margin recurring revenue business. A solid demand for its solutions across the market is likely to have been a key growth driver.

The company’s employee usage strategy, sales efforts and investments are anticipated to have boosted sales growth.

The differentiated product offering of Direct Data Exchange for all Paycom clients is expected to have aided customer additions. Moreover, the launch of Ask Here is anticipated to have been conducive to its quarterly performance.

Further, Paycom’s growing foothold among larger companies makes us optimistic about its upcoming quarterly results.

We believe investors should be more focused on the company’s guidance rather than the quarterly results. They would want to hear from Paycom’s management regarding plans to combat the coronavirus crisis and stay afloat.

What Our Model Says

Our proven model does not predict an earnings beat for Paycom this season. The combination of a positive Earnings ESP, and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Paycom currently carries a Zacks Rank of 3 and has an Earnings ESP of -3.00%.

Stocks With Favorable Combinations

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat this quarter:

InterDigital, Inc. (IDCC - Free Report) has an Earnings ESP of +152% and sports a Zacks Rank of 1, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

ServiceNow, Inc. (NOW - Free Report) has an Earnings ESP of +1.47% and currently carries a Zacks Rank of 3.

EPAM Systems, Inc. (EPAM - Free Report) has an Earnings ESP of +0.55% and holds a Zacks Rank of 3 currently.

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