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Oklahoma City-based Paycom Software, Inc. (PAYC) provides cloud-based human capital management (HCM) SaaS solutions for integrated software for employee records and talent management processes. Valued at $11.6 billion by market cap, Paycom serves over 36,000 clients with employees in the U.S., Canada, Mexico, the U.K. and Ireland.
The software major is expected to announce its fourth-quarter earnings on Wednesday, Feb. 5. Ahead of the event, analysts expect Paycom to report a non-GAAP profit of $1.62 per share, up 13.3% from $1.43 per share reported in the year-ago quarter. Furthermore, the company has surpassed or matched Wall Street’s bottom-line projections in each of the past four quarters. Its adjusted EPS for the last reported quarter declined marginally to $1.31 but exceeded analysts’ estimates by 9.2%.
For the full fiscal 2024, analysts expect Paycom to report an adjusted EPS of $6.88, up 16.6% from $5.90 in fiscal 2023. While in fiscal 2025, its earnings are expected to grow 4.1% year-over-year to $7.16 per share.
PAYC stock has gained 1.6% over the past 52 weeks, substantially underperforming the Technology Select Sector SPDR Fund’s (XLK) 18.2% gains and the S&P 500 Index’s ($SPX) 22% surge during the same time frame.
Paycom Software’s stock prices skyrocketed 21.4% in the trading session after the release of its better-than-expected Q3 results on Oct. 30. Driven by the surge in its recurring revenues, Paycom’s overall total revenues increased 11.2% year-over-year to $451.9 million, exceeding Wall Street’s topline estimates. Meanwhile, the company also showcased impressive expense management by cutting down on its general and admin expenses. And despite a 21.6% increase in research and development spending to over $63 million, Paycom’s operating income grew 8.2% year-over-year to $104.9 million.
However, analysts remain cautious about Paycom's prospects. The stock has a consensus “Hold” rating overall. Of the 18 analysts covering the stock, two advise “Strong Buy” and 16 recommend a “Hold” rating. Its mean price target of $219.38 represents a 9.3% premium to current price levels.
