Earnings Preview: What To Expect From Paycom Software's Report

With a market cap of $9.6 billion, Paycom Software, Inc. (PAYC) provides cloud-based human capital management (HCM) solutions for small to mid-sized businesses in the U.S. Its platform integrates payroll, HR, and talent management functions, streamlining workforce management from recruitment to retirement. The Oklahoma City, Oklahoma-based company is expected to announce its Q3 earnings after the market closes on Wednesday, Oct. 30.

Ahead of the event, analysts expect the human resources and payroll software maker to report a profit of $1.22 per share, down 7.6% from $1.32 per share reported in the year-ago quarter. However, the company has consistently surpassed Wall Street’s EPS projections in the past four quarters. In the most recent quarter, PAYC exceeded the consensus estimates by 6.2%.

In fiscal 2024, analysts expect Paycom Software to report an EPS of $6.67, up 13.1% from $5.90 in fiscal 2023. Looking forward to fiscal 2025, its EPS is expected to grow 7.1% year-over-year to $7.14. 

PAYC stock is down 21.1% on a YTD basis, underperforming the S&P 500 Index’s ($SPX) 22.1% gains and the Industrial Select Sector SPDR Fund’s (XLI) 21.9% returns over the same time frame.

Shares of Paycom Software rose marginally following its Q2 earnings release on Jul. 31 because the company reported better-than-expected revenue of $437.5 million and adjusted earnings of $1.62 per share. Additionally, recurring revenue, which accounted for 98.4% of total sales, grew 9.1% year over year, highlighting strong demand for its core services. Paycom also raised its full-year adjusted EBITDA guidance, helping to offset concerns about rising operating expenses and a cautious Q3 revenue forecast.

The consensus opinion on Paycom Software stock is cautious, with an overall “Hold” rating. Out of the 19 analysts covering the stock, two recommend “Strong Buy” and 17 suggest “Hold.” As of writing, PAYC is trading below the average analyst price target of $181.54. 

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On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.