Paylocity Holding’s Earnings Growth Lags Behind Impressive Shareholder Returns

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Paylocity Holding ($NASDAQ:PCTY) is a leading provider of cloud-based human capital management software for mid-sized organizations. The company has seen impressive shareholder returns in recent years, with the stock more than tripling over the last five years.

However, this share price appreciation has not been matched by earnings growth. Paylocity has reported lower earnings for four of the last five years, and the level of earnings growth achieved in the five-year period has been far below that of the share price appreciation. As a result, it appears unlikely that earnings growth will pick up quickly, leaving Paylocity’s impressive shareholder returns unsupported by a similar level of growth in its profits.

Earnings

The recent earning report of PAYLOCITY HOLDING for the fiscal year 2024 Q1 as of September 30 2021 showed total revenue of 181.7M USD and net income of 30.93M USD. Though this marks a 1.9% increase in net income compared to the same period last year, the total revenue decreased by 28.3%. Despite this earnings lag, PAYLOCITY HOLDING experienced impressive shareholder returns over the last three years, with total revenue climbing from 181.7M USD to 317.59M USD. This indicates that the company’s investment and strategies have been paying off despite its current earnings lag.

About the Company

Income Snapshot

Below shows the total revenue, net income and net margin for Paylocity Holding. More…

Cash Flow Snapshot

Below shows the cash from operations, investing and financing for Paylocity Holding. More…

Balance Sheet Snapshot

Below shows the total assets, liabilities and book value per share for Paylocity Holding. More…

Key Ratios Snapshot

Some of the financial key ratios for Paylocity Holding are shown below. More…

Stock Price

Paylocity Holding‘s earnings growth has lagged behind impressive shareholder returns in recent years. On Tuesday, PAYLOCITY HOLDING stock opened at $150.5 and closed at $150.3, down by 1.3% from last closing price of 152.3.

However, the company’s earnings growth has not been able to keep up with its impressive returns to shareholders. The company’s dividend growth rate has been outpacing its earnings growth rate, and its share buybacks have also been increasing steadily. As a result, PAYLOCITY HOLDING has been able to generate double-digit returns for its shareholders even as earnings growth has been lagging. Despite the lackluster earnings growth, PAYLOCITY HOLDING remains an attractive option for investors looking for steady returns in the long-term. With its strong financials and impressive returns to shareholders, PAYLOCITY HOLDING is well-positioned to continue providing solid returns for its investors. Live Quote…

Analysis

GoodWhale did an analysis of PAYLOCITY HOLDING‘s fundamentals, and based on our Star Chart the company was classified as a ‘gorilla’. This means that they have achieved stable and high revenue or earning growth due to their strong competitive advantage. Its health score is 8/10, meaning that it is capable of safely riding out any crisis without the risk of bankruptcy. Additionally, they have strong growth, profitability, and medium asset scores, although their dividend score is a bit weaker. GoodWhale recommends that those looking to invest in PAYLOCITY HOLDING consider these fundamentals, and weigh the pros and cons before making any decisions. More…

Peers

Paylocity Holding Corp is a company that provides cloud-based software solutions for payroll and human capital management. The company competes with other companies in the same industry, such as Paycom Software Inc, Xero Ltd, and Paycor HCM Inc.

– Paycom Software Inc ($NYSE:PAYC)

Paycom Software Inc is a publicly traded company with a market cap of 17.93B as of 2022. The company has a Return on Equity of 19.62%. Paycom Software Inc is a provider of cloud-based human capital management software. The company’s software is used by businesses to manage payroll, benefits, and human resources.

– Xero Ltd ($ASX:XRO)

As of 2022, Xero Ltd has a market cap of 10.98B and a Return on Equity of 2.38%. The company provides an online accounting software for small businesses and their advisors. The software is designed to save businesses time and money by automating tasks such as bookkeeping, invoicing, and tax preparation.

– Paycor HCM Inc ($NASDAQ:PYCR)

Paycor HCM Inc is a provider of human capital management solutions. The company has a market cap of 4.91B as of 2022 and a Return on Equity of -6.69%. Paycor HCM Inc provides solutions for payroll, benefits, talent, and time and labor management. The company offers its solutions to businesses of all sizes in the United States.

Summary

Paylocity Holding is an attractive investment opportunity for those seeking strong returns. Over the last five years, the company has seen a steady increase in revenue, along with an impressive growth rate of shareholder return. The current stock price offers good value for money and long-term investors are likely to benefit from the company’s success. Paylocity Holding’s financial strength and ability to consistently generate growth are also key factors for investors to consider when deciding whether to invest in the company.

The company has a low debt-to-equity ratio, which is beneficial to investors, as it indicates that the company is not overly reliant on debt and is able to finance its operations via internal sources. With a well-diversified portfolio of products and services, and a commitment to shareholder returns, Paylocity Holding remains an attractive investment for those looking for long-term gain.