Paycom (PAYC) Scales 52-Week High: What's Driving The Stock?
Zacks Investment Research | Jun 21, 2017 05:56AM ET
Shares of Paycom Software, Inc. (NYSE:PAYC) touched a new 52-week high of $72.80 during yesterday’s trading session, eventually closing at $70.35.
Notably, the stock has outperformed the Zacks categorized Internet - Software industry in the past year. Paycom shares surged 70.6% compared with market growth of 20%.
Paycom provides cloud-based human capital management (HCM) software solution delivered as Software-as-a-Service (SaaS) with functionality and data analytics to manage the complete employment lifecycle, from recruitment to retirement.
The company’s sustained focus on investing in SaaS technology and mobile applications has been driving its revenue. We believe that Paycom’s cloud-based solution has greater demand across a wide section of verticals. Larger companies have greater and more complex HCM needs and Paycom’s solution is evolving to serve them.
Growth of cloud computing has supported the company’s SaaS delivery model. According to IDC, the global SaaS market is expected to increase at a five-year compound annual growth rate (CAGR) (2014–2019) of 16%. With its SaaS-based applications, we believe that Paycom is well-positioned to lead the market for advanced human capital management and payroll software solutions.
Furthermore, revenue growth seems to be steady and has been positively impacted by higher recurring revenues and traction in cloud-based offerings. Notably, in the past three fiscals, its recurring revenues have grown at a CAGR of approximately 48%.
The company currently derives the majority of revenues from payroll processing. As per International Data Corporation’s (IDC), the U.S. market for payroll services will reach $17.7 billion in 2017 providing a tremendous growth prospect for the company.
Additionally, an impressive track record of exceeding the quarterly earnings expectations has kept investors confidence over the company’s longterm growth prospect. Notably, last month, the company had reported stellar results for the first quarter of fiscal 2017 wherein both the top line and bottom line not only came ahead of our expectations but also marked a significant year-over-year improvement.
The company’s growth momentum is likely to continue in the quarters ahead as evident from its impressive second-quarter revenue guidance as well as upbeat revenue outlook for fiscal 2017 provided during its last quarter’s earnings conference call.
Get The News You Want
Currently, Paycom carries a Zacks Rank #3 (Hold).
Stocks to Consider
Better-ranked stocks in this industry include AppFolio, Inc. (NASDAQ:APPF) , Paylocity Holding Corp. (NASDAQ:PCTY) and Amaya Inc. (TO:AYA) . AppFolio and Paylocity sport Zacks Rank #1s (Strong Buy), while Amaya carries a Zacks Rank #2 (Buy). You can see
In the trailing four quarters, AppFolio, Paylocity and Amaya delivered average positive earnings surprises of 75.33%, 66.97% and 9.11% respectively.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.
Zacks Investment Research
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.