Specialist in payroll and human resource management in the cloud PayLocity (NASDAQ: PCTY) has lost ground in recent sessions, although it is far from closing the gap of a price jump after the earnings report.
Paylocity offers a range of products to simplify payroll, automate processes, and manage compliance requirements. It also offers expense management products, on-demand payments, and seizure solutions. In terms of human resources, the offering includes self-service solutions for employees, a document library, a compliance dashboard and software to track time and attendance data.
The company earned $0.80 per share on $229 million in revenue. Those were year-over-year increases of 74% and 37%, respectively.
A quick check of MarketBeat earnings data shows that these were significant beats on both the top and bottom lines.
The stock rose 12.72% after the report.
In the earnings conference call, co-CEO Toby Williams cited several reasons for the company’s success in the quarter.
“The ability to attract and retain talent remains a top priority for our clients as the combination of a tight labor market and the challenges associated with managing remote, on-site and hybrid teams drives demand for HR technology This dynamic is reflected in increasing adherence rates across our platform,” he said.
When Williams says “speed linking,” he’s referring to the percentage of customers who purchase add-ons for the basic plan. In the case of Paylocity, that could be learning management, premium video, and surveys.
Williams continued: “Demand remains strong and our sales teams performed very well in fiscal ’22. We saw strong sales execution across our market, leading to healthy sales activity and preparing us for a strong fiscal ’23. Building on this strong momentum We expanded our sales force for fiscal ’23 by adding new salespeople.”
Analysts were encouraged by Paylocity’s strong growth and optimistic outlook for fiscal 2023. Since the earnings report, nine analysts have raised their price target for Paylocity, as you can see from MarketBeat’s Analyst Data.
Analysts’ consensus on the stock is “moderate buy” with a price target of $267.19, representing a gain of 8.18%.
A monthly chart from Paylocity gives you an excellent idea of the stock’s steady upward trajectory since the 2014 IPO.
ADP is up 6.10% this month. Shares also rose 14.80% in July, following the company’s fourth-quarter fiscal report. ADP earned $1.50 per share, with a top score of $0.03, according to MarketBeat data. Revenue of $4.13 billion was also higher than expected.
ADP’s results accelerated over the past two quarters. In the company’s earnings call, CFO Don McGuire said the company’s “consolidated revenue outlook is 7% to 9% growth in fiscal ’23…”.
He added, “we expect adjusted EPS growth of 13% to 16%, supported by buybacks…”
Those expectations helped push the stock higher in July and August.
paychex is another reputable payroll company whose inventory has also been strong lately.
Morningstar analyst Emma Williams listed several pros and cons related to Paychex.
“We expect increased regulatory complexity, tight labor markets and growing adoption of hybrid work to support strong demand for Paychex’s offerings that support increased wallet share and market share gains,” she wrote. “This includes greater penetration of the outsourced payroll and workforce model into the small business market. While we factor in market share gains, we expect increased competition to limit Paychex’s pricing power and force the company to incur higher spending on software development and innovation. to stay competitive.”
The stock is up 10.90% in the past month and 14.87% in the past three months. Since December, it has repeatedly hit resistance just below $140. If you see a breakout above that level, that could be an indication that another rally is in the cards.