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Paycom (PAYC) to Report Q4 Earnings: What's in the Cards?

Paycom Software, Inc.PAYC is set to report fourth-quarter 2017 earnings results on Feb 6. This company has witnessed a remarkable streak of beating earnings estimates, especially when looking at the previous four reports. In fact, over the trailing four quarters, Paycom Software surpassed the Zacks Consensus Estimate, with an average positive earnings surprise of 36.1%.

Let's see how things are shaping up prior to this announcement.

What to Expect?

The Zacks Consensus Estimate for the quarter is pegged at 23 cents, reflecting a year-over-year increase of 27.8%. The Zacks Consensus Estimate for sales of $113 million indicates around 28.7% growth from the prior-year quarter.

Factors to Consider

Paycom Software 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 continued focus on investing in the SaaS technology and mobile applications has been driving revenues. We believe Paycom Software's cloud-based solution has greater demand across a wide section of verticals. Larger companies have greater and more complex HCM needs, and Paycom Software's solution is evolving to serve those.

Growth of cloud computing has supported the company's SaaS delivery model. According to Gartner IT , the global SaaS market is expected to increase at a four-year compound annual growth rate (CAGR) (2017-2019) of 18.4%. With its SaaS-based applications, we believe Paycom Software is well positioned to lead the market for advanced human-capital management and payroll software solutions.

Furthermore, we expect the company's fourth-quarter revenues to be positively influenced by elevated recurring revenues and higher traction in cloud-based offerings. Also, better-than-expected demand for advanced human-capital management and payroll software solutions are the other catalysts.

We also believe higher adoption of Paycom Software's Affordable Care Act (ACA) dashboard application that tracks employee count, employee status and health-care plan affordability will act as a tailwind. Also, Paycom Software might witness long-term growth by successfully cross-selling fresh products to the existing client base, which is likely to bolster revenues.

Paycom Software, Inc. Price and EPS Surprise

Paycom Software, Inc. Price and EPS Surprise | Paycom Software, Inc. Quote

What the Zacks Model Unveils?

Our proven model does not conclusively show that Paycom Software is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Paycom Software carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company has an Earnings ESP of 0.00%, as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 23 cents. The combination of Paycom Software's Zacks Rank #3 and Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks With Favorable Combination

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

NVIDIA Corporation NVDA has an Earnings ESP of +4.71% and a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here .

GrubHub Inc. GRUB has an Earnings ESP of +5.39% and a Zacks Rank #2.

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Gartner, Inc. (IT): Free Stock Analysis Report

Paycom Software, Inc. (PAYC): Free Stock Analysis Report

GrubHub Inc. (GRUB): Free Stock Analysis Report

NVIDIA Corporation (NVDA): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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