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Paylocity Q1 Earnings: Is NasdaqGS:PCTY Expensive at 156.8x Price/EPS?

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Paylocity Holding Corporation (NasdaqGS:PCTY) is scheduled to report Q1 earnings results on November 5, 2020.

The company is expected to report earnings of $0.15/share on revenue of $134.4 million. The consensus earnings per share (EPS) of $0.15/share is based on a poll of 17 analysts and represents a decline in eps of −59.7% over the same quarter last year, when the company reported earnings of $0.36/share.

The revenue forecast of $134.4 million based on a poll of 16 analysts implies a year-over-year (YoY) growth in revenue of 6.1%. Last year the company reported $126.7 million in revenue for the quarter.

Expected to report EPS contraction of −59.7% for Q1, 2021
Metric Expected Prior Year YoY Change
Revenue $134.40 $126.72 6.1%
EPS $0.15 $0.36 −59.7%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and met expectations 1 quarter.

What are your expectations from Paylocity Holding Corporation for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q4, 2020 $0.13 $0.32 151.7% Beat
Q3, 2020 $0.69 $0.83 21.0% Beat
Q2, 2020 $0.29 $0.36 23.0% Beat
Q1, 2020 $0.26 $0.36 36.4% Beat
Q4, 2019 $0.25 $0.34 37.1% Beat
Q3, 2019 $0.57 $0.60 4.5% Beat
Q2, 2019 $0.22 $0.23 4.5% Beat
Q1, 2019 $0.20 $0.20 0% Met

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −3.9%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 6, 2020 $138.22 $132.80 −3.9% Decline
May 7, 2020 $114.57 $117.42 2.5% Increase
February 4, 2020 $144.12 $136.78 −5.1% Decline
October 30, 2019 $102.86 $102.60 −0.3% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.27, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.27 implies a 1.2% chance of earnings manipulation.

Fundamentals And Technical Analysis

Paylocity Holding Corporation is currently trading at $187.64/share, down −1.3% for the day. The company is trading at approximately 95.6% of its 52-week high of $196.37/share. The company’s stock price is up 41.3% since the last earnings report and up 0.5% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 71.67 suggests the company is trading in technically overbought territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:PCTY Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 156.80 and a forward P/E multiple of 124.56.

Paylocity Holding Corporation’s current share price also implies a price-to-book (P/B) multiple of 25.72. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q4
Period End Date June 30, 2020
Stock Price (Current) $187.64
P/E Ratio 156.8x
P/E Ratio (Fwd) 124.6x
PEG Ratio 8.6
Total Debt / Total Capital 1.7%
Levered Free Cash Flow $96.077 million
EV / EBITDA 113.0x

Finbox

Paylocity Holding Corporation is a large-cap stock with a market capitalization of $10.309 billion and a total enterprise value of $10.204 billion. The company operates in the Information Technology sector and the Software industry.

Paylocity Holding Corporation provides cloud-based payroll and human capital management software solutions for medium-sized organizations in the United States. The company offers Payroll module that enables clients to automate key payroll processes and manage compliance; Core HR module, which provides a set of HR capabilities enabling clients to manage HR data; and Talent module that enable clients to manage their talent throughout employees’ tenures, starting at recruiting and carrying through onboarding, learning, and performance management. It also provides Workforce Management module for time and attendance and scheduling functionality, enabling clients to collect hourly data for employees, improve productivity, and help organizations control labor costs; Benefits modules, which offers benefit management solutions that integrate with insurance carrier systems to provide automated administrative processes. In addition, the company offers third-party administrative services for clients designed to modernize the administration of flexible spending accounts, health savings accounts, transportation management accounts, premium only plans, and health reimbursement arrangements for their employees. Further, it provides implementation and training, client, and tax and regulatory services. The company sells its products through sales representatives. The company was founded in 1997 and is headquartered in Schaumburg, Illinois.

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