Is Paylocity Stock a Solid Long Term Investment?
Investors are constantly seeking shares that are primed to outperform during earnings season, and Paylocity Holding Corporation (PCTY) could be one of them. The company’s earnings report is due up shortly, and things are gearing up well. This is because Paylocity stock has recently had favorable earnings expectation adjustment activity, which is typically a prelude to an earnings surprise. And besides, analysts upping their predictions immediately before earnings, using very up-to-date data available, is a very great indicator of some positive returns for Paylocity in this quarter. According to S&P Global Market Intelligence data, Paylocity stock returned 29.8% in August 2021 by outperforming earnings expectations projections and afterward riding the trend in smaller and larger stocks in the second half of the month. Paylocity announced adjusted earnings of $0.46 per share, which was significantly higher than the $0.28 predicted by analysts. The company consistently outperformed sales projections, but by a considerably smaller margin. Paylocity Holding Corporation is in an excellent position currently, and it is capitalizing on it. Payroll, scheduling, time tracking, and benefits administration are among the company’s products and services, focusing on small enterprises. All those services are in high demand, and the company appears to be reducing its competitors’ market share. Nonetheless, decreased interest rates have reduced the company’s investment returns on funds kept for customers. Today, I’ll examine the most recent information on Paylocity Holding’s outlook and value to see whether the long-term investment opportunity remains.
About Paylocity Holding Corp Stock
Paylocity Holding Corporation is a cloud-based payroll and HCM software provider platform for medium-sized businesses. The firm’s services are delivered via a SaaS model that makes use of its cloud-based technology. A multi-tenant design is used to provide a software suite on the cloud-based platform. The platform includes a range of integrated payroll and human capital management apps. Talent Management, Time and Labor (Web Time and Web Expense), Paylocity Web Pay, Core HR (Web HR), Third-Party Administrative (TPA) Services, and Benefits (Web Benefits) are among the goods offered by the company via its cloud-based platform. The multi-tenant technology platform is customizable and provides a unified set of payrolls and human capital management services such as talent management and time and labor monitoring.
Paylocity Holding Corp Stock Forecast
The introduction of cloud computing has dramatically altered the contemporary business environment. The market is increasing as businesses realize the numerous advantages of accessing software services and apps via the Internet rather than having all of the resources with an organization. Cloud computing has not left the HR department, which is widely regarded as a non-innovative field, unaffected. Corporations such as Paylocity Holding Corp. are capitalizing on this transition, and shareholders stand to profit handsomely from their investments. As previously stated, the company develops software for medium-sized businesses, and right now, Paylocity stock is rising due to sustained demand for its services as the corporate tax environment in the United States becomes more complicated. Paylocity has delivered payroll and human capital management software solutions to about 16,700 customers in the United States, with over 100 workers on average. The list is still growing, and Paylocity stock is expected to go up as the company’s market potential grows. The human capital management market was predicted to expand from $14.5 billion in 2017 to $22.5 billion by 2022, per MarketsandMarkets Research Private Ltd. This prediction equates to a compound annual growth rate (CAGR) of 9.2%. According to Walletinvestor.com, Paylocity stock is a solid long-term investment. The stock Paylocity Holding Corp can be a beneficial investment opportunity if you look for higher profits stocks. According to Wallet Investor forecasts, if the Paylocity Holding Corp quote is 209.160 USD on January 6th, 2022, long-term growth is expected, with a Paylocity stock price prediction of 623.517 USD on January 1st, 2027. The income is expected to be around +198.11% after a 5-year investment. In 2027, your present $100 investment might be worth up to $298.11.
Paylocity’s Benefits and Drawbacks
Any business has benefits and drawbacks, the majority of which will depend on the selected industry and what users hope to gain from the services provided by the company. That being said, here are some Paylocity Holding Corporation highs and lows to consider before investing in the stock.
Paylocity Holding Corporation provides over 300 integrations over 20 product categories, such as application tracking, insurance, time and attendance, and much more. This means it is possible to connect any other business administration systems you use to share information across platforms and eliminate necessary manual imports. It also enables you to even further modify your software in order to benefit as much as possible from the software.
PCTY features a push notification option known as webhooks, which allows users to establish a bespoke notification system prompted by particular events, such as new hiring, termination, time-off authorization, or other changes, in addition to their normal services and connections. This approach implies less manual effort for the staff and a lower likelihood of things failing to be noticed. With a streamlined process, the corporation can attract a large number of users, thus completely increasing the Paylocity stock value.
Paylocity’s website does not display pricing upfront. While it’s smart to avoid quote-based pricing, because there’s no way of knowing if you have the same price as a similar-sized organization with much the same HR needs, it may be advantageous for the company to engage directly with the providers to develop a tailored solution. However, to guarantee that you are obtaining a fair price, it is recommended to get quotations from various companies before deciding on Paylocity Holding Corp.
Some users who appreciate Paylocity’s services complain about the company’s customer support. Users have reported that it can take a long time for a customer support agent to respond. Others found the program to be confusing and prone to errors, making it unsuitable for payroll newcomers. And, as any company owner will tell you if an issue prevents your payroll from being distributed on time, you’ll want a rapid remedy. Paylocity is costly to set up, and its full-featured solutions are near the top of the price range. Smaller firms can find more economical choices elsewhere, and the corporation may lose valuable clients, causing the stock to fall.
Paylocity Stock: Quick Facts
Paylocity Holding Corporation announced non-GAAP revenue of 59 cents a share in the Q1 of FY 2022, exceeding the Zacks Consensus Estimate of 37 cents. Its end result grew 55.3% from 38 cents a share in the previous quarter. Paylocity’s income grew 34% annualized to $181.7M, exceeding the Zacks Consensus Estimate of $174.2M. The rise in top-line earnings is due to a 34% rise in recurring revenues, which reached $180.8M. Interest earned on money maintained for clients, on the other hand, declined 5% to $0.9M. During the current fiscal, Paylocity acquired Blue Marble Payroll, a prominent global payroll solution, in order to provide its customers with a uniform approach to pay staff, automate procedures, and enforce compliance across over 150 countries around the world. The company has benefited from an increase in the acceptance of its products among customers with fewer than 50 employees. Strong traction in the firm’s base and top end of the market is also a positive factor. Nonetheless, decreased interest rates have reduced the company’s investment returns on funds kept for clients.
Non-GAAP total revenue for Paylocity Holding Corp. was $128.1M, increasing 36% each year. Annualized, non-GAAP total revenue increased by 110 basis points (BPS) to 70.5 percent. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) grew 49.4% year after year to $46.1M. Yet, the adjusted EBITDA margin of 25.4% increased by 270 basis points. Non-GAAP operating cash flow grew to $36.2M from $21.4M the previous year. In addition, the non-GAAP operating margin increased by 410 basis points to 19.9%.
Balance Sheet and Other Information
Paylocity Holding Corporation ended the fiscal Q1 with $69.6M in cash, marketable securities, and corporate investments, contrasted to $208M the previous quarter. Furthermore, as of September 30, 2021, the corporation had no long-term financial debt due. Paylocity utilized $4.1M of operating cash flow (OCF) in the Q1 of FY 2022.
Paylocity Holding Corporation anticipates earnings of about $189.5M in the fiscal Q2, representing a 30% increase over the previous year. Adjusted EBITDA is expected to be at the $42M level. PCTY boosted its forecast for FY 2022. The company now expects earnings of about $820M, representing a 29% increase from FY 2021, relative to the earlier projection of about $795M. Adjusted EBITDA is now estimated to be in the $220M level for FY 2022, up from the previous projection of about $213.5M.
Paylocity Holding Corp Stock Rating
Stock valuation is a key element for investment decisions since successful stock investing entails investing low and selling high. Purchasing stocks that are expected to rise in value often entails purchasing stocks that are inexpensive in the first place; however, enthusiastic investors may disagree. Evaluation necessitates access to huge volumes of data, as well as the skills and time to sort through everything, generate a level of financial statistics, examine cash flows, and assess recent stock market volatility. The A+ Investor value, growth, and momentum grades assigned by AAII are based on a stock’s value score. These provide straightforward A-F grades for five major investing factors: value, growth, momentum, earnings revisions, and quality. Thus, the Paylocity stock has a Value Grade of F, a Growth Grade of B, and a Momentum Grade of A. Your objectives and risk level will determine if this is a worthwhile investment option. Paylocity is now ranked as a Zacks Rank #4. Zack anticipates a lower-than-average return on Paylocity stock than the market in the coming quarters. Paylocity also has a VGM Grade of C (‘Value, Growth, and Momentum). The company appears to be expensive according to valuation criteria. Its Value Grade of D shows that it is a poor choice for value investors. Paylocity’s financial status and future prospects show that the company has the ability to outperform the markets. The company has a Growth Grade of C. With a Momentum Grade of A, the latest price swings and revenue prediction changes show that this may be a promising investment for momentum investors.
The Bottom Line: Is Paylocity Stock a Solid Long Term Investment?
Is Paylocity stock still a solid choice? According to the Simply Wall St pricing model, the stock value is currently overpriced by around 33%, selling at $266 compared to the real value of $199.23. This is not good news for those going to invest in the stock. If you trust the stock, you should keep a watch for a possible price drop in the long run. Because the stock value of Paylocity stock is highly unpredictable, it is possible that it will fall or appreciate further in the long term, providing investors with another opportunity to have a solid long-term investment. This is mainly due to the high volatility, which is a strong indicator of how far the stock fluctuates in comparison to the majority of the markets. As a result, investors seeking gains in their portfolio may wish to examine the future of Paylocity Holding Corp. before purchasing its stock. While professional investors would say that the real value compared to the price is by far the most important factor, an ideal investment argument would be great potential for growth at a low price. Paylocity’s future appears bright, with profits predicted to increase by 80% over the next few years. Better cash flow appears to be in the stock’s future, which should result in a higher stock price.
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