雅虎香港財經 Paycom (PAYC) Down 2.3% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Paycom Software (PAYC). Shares have lost about 2.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Paycom due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Paycom Q2 Earnings and Revenues Surpass Estimates
Paycom reported second-quarter 2024 results, wherein both the top and bottom lines surpassed the Zacks Consensus Estimate.
The online payroll and human resource technology provider reported non-GAAP earnings of $1.62 per share in the second quarter, beating the Zacks Consensus Estimate of $1.58. The bottom line remained unchanged year over year as the benefits of higher revenues and lower share counts were offset by increased operating expenses and income taxes.
Paycom reported revenues of $437.5 million, beating the consensus mark of $436.2 million. The top line climbed 9.1% year over year. The figure was toward the high end of management’s guidance of $434-$438 million. The top line benefited from increased sales momentum, international expansion and integration of AI in its products.
Quarter in Detail
Paycom’s Recurring revenues (representing 98.4% of the total revenues) improved 9.1% to $430.4 million in the second quarter. Our estimate for the company’s Recurring revenues was pegged at $428.5 million.
The company’s revenues from the Implementation and Other segment improved to $7.1 million from $6.6 million in the year-ago quarter and contributed 1.6% to total sales. Our estimate for the segment’s revenues was pegged at $7.6 million.
Adjusted gross profits climbed 6.2% from the year-ago period to $357.8 million. However, the adjusted gross margin contracted 220 basis points (bps) on a year-over-year basis to 81.8%.
Paycom’s adjusted EBITDA increased 2% year over year to $159.7 million. The adjusted EBITDA margin contracted 250 bps to 36.5%.
Balance Sheet & Cash Flow
Paycom exited the second quarter with cash and cash equivalents of $346.5 million compared with $371.3 million recorded in the previous quarter. The company had no debt as of Jun 30, 2024, as it paid off all its long-term debt at the end of 2023.
In the first-half of 2024, PAYC generated an operating cash flow of approximately $280.7 million, paid out $42.4 million in dividends and bought back $80.8 million worth of its common stock.
The company had $1.5 billion remaining under its buyback authorization as of Jun 30, 2024. Paycom’s board has approved its upcoming quarterly dividend of 37.5 cents per share, payable in the middle of September 2024.
Guidance
For the third quarter of 2024, Paycom forecasts revenues in the range of $444-$449 million and expects adjusted EBITDA between $155 million and $159 million.
For 2024, PAYC now forecasts revenues in the band of $1.860-$1.875 billion compared with the previous guidance of $1.860-$1.885 billion. Paycom now expects its 2024 adjusted EBITDA between $727 million and $737 million, up from the earlier projection of $720-$730 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, Paycom has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Paycom has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Paycom belongs to the Zacks Internet - Software industry. Another stock from the same industry, F5 Networks (FFIV), has gained 3.4% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
F5 reported revenues of $695.5 million in the last reported quarter, representing a year-over-year change of -1%. EPS of $3.36 for the same period compares with $3.21 a year ago.
F5 is expected to post earnings of $3.46 per share for the current quarter, representing a year-over-year change of -1.1%. Over the last 30 days, the Zacks Consensus Estimate has changed +1%.
F5 has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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