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DOW   39,131.53
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MILAN FASHION PHOTOS: Gucci sparkles as De Sarno hits stride
Google says its AI image-generator would sometimes 'overcompensate' for diversity
S&P 500   5,088.80
DOW   39,131.53
QQQ   436.78
Warren Buffett uses his annual letter to warn about Wall Street and recount Berkshire's successes
Better Than Oil Stocks (Ad)
MarketBeat Week in Review – 2/19 - 2/23
Taiwan giant chipmaker TSMC opens first plant in Japan as part of key global expansion
Better Than Oil Stocks (Ad)
White House, tribal leaders hail 'historic' deal to restore salmon runs in Pacific Northwest
A collection of the insights Warren Buffett offered in his annual letter Saturday
Better Than Oil Stocks (Ad)
MILAN FASHION PHOTOS: Gucci sparkles as De Sarno hits stride
Google says its AI image-generator would sometimes 'overcompensate' for diversity
S&P 500   5,088.80
DOW   39,131.53
QQQ   436.78
Warren Buffett uses his annual letter to warn about Wall Street and recount Berkshire's successes
Better Than Oil Stocks (Ad)
MarketBeat Week in Review – 2/19 - 2/23
Taiwan giant chipmaker TSMC opens first plant in Japan as part of key global expansion
Better Than Oil Stocks (Ad)
White House, tribal leaders hail 'historic' deal to restore salmon runs in Pacific Northwest
A collection of the insights Warren Buffett offered in his annual letter Saturday
Better Than Oil Stocks (Ad)
MILAN FASHION PHOTOS: Gucci sparkles as De Sarno hits stride
Google says its AI image-generator would sometimes 'overcompensate' for diversity

3 Payroll Software Makers Set For Growth In 2023

3 Payroll Software Makers Set For Growth In 2023Cloud-based payroll and human resources management specialist Paylocity NASDAQ: PCTY has lost ground in recent sessions, although it’s still far from closing the gap from a price jump following its earnings report. 

Paylocity offers a suite of products to simplify payroll, automate processes and manage compliance requirements. It also offers products to address expense management, on-demand payment, and garnishment solutions. On the human resources side, offerings include employee self-service solutions, document library, compliance dashboard and software to track time and attendance data. 

The company earned $0.80 per share on revenue of $229 million. Those were year-over-year increases of 74% and 37%, respectively.

A quick check of MarketBeat earnings data shows that those were significant beats on both the top- and bottom lines.

The stock gapped 12.72% higher following the report. 

In the earnings conference call, co-CEO Toby Williams cited several reasons for the company’s success in the quarter. 

“The ability to attract and retain talent remains top of mind for our clients as the combination of a tight labor market and the challenges that come with managing remote, on-site and hybrid teams are driving increased demand for HR technology. These dynamics are reflected in increasing attach rates across our entire platform,” he said. 

When Williams says “attach rate,” he is referring to the rate of clients purchasing add-ons to the basic subscription. In the case of Paylocity, that may include learning management, premium video and surveys.


Williams went on to say, “The demand environment remains strong, and our sales teams executed very well in fiscal '22. We saw strong sales execution across our entire market, driving healthy sales activity and setting us up for a strong fiscal '23. Building off this strong momentum, we've expanded our sales force for fiscal '23 by adding new sales reps.” 

Analysts were encouraged by Paylocity’s strong growth and upbeat outlook for fiscal 2023. Since the earnings report, nine analysts boosted their price target on Paylocity, as you can see by using MarketBeat’s analyst data

The analyst consensus rating on the stock is “moderate buy” with a price target of $267.19, representing an upside of 8.18%. 

A monthly chart of Paylocity gives you an excellent glimpse of the stock’s steady upward trajectory since its 2014 IPO. 
3 Payroll Software Makers Set For Growth In 2023

Compared to other payroll processors such as Automatic Data Processing NASDAQ: ADP and Paychex NASDAQ: PAYX, which have been public for decades, Paylocity is a relative newcomer.

ADP is up 6.10% this month. Shares also climbed 14.80% in July on the heels of the company’s fiscal fourth-quarter earnings report. ADP earned $1.50 per share, topping views by $0.03, according to MarketBeat data. Revenue of $4.13 billion was also ahead of expectations. 

ADP’s earnings accelerated in the past two quarters. In the company’s earnings call, CFO Don McGuire said the company’s “consolidated revenue outlook is the 7% to 9% growth in fiscal '23 …”  

He added, “we expect adjusted EPS growth of 13% to 16% supported by buybacks …”

Those expectations helped propel the stock higher in July and August.
3 Payroll Software Makers Set For Growth In 2023

Paychex is another well-established payroll company whose stock has also been strong lately. 

Analyst Emma Williams of Morningstar summed up several pros and cons regarding Paychex.

“We expect increased regulatory complexity, tight labor markets, and a growing adoption of hybrid work will underpin strong demand for Paychex's suite of offerings supporting greater share of wallet and market share gains,” she wrote. “This includes greater penetration of the outsourced payroll and human resources model in the small-business market. While we factor in market share gains, we expect increasing competition to limit Paychex's pricing power and force the company to sustain elevated expenditure on software development and innovation to remain competitive.”

The stock is up 10.90% in the past month and 14.87% in the past three months. Since December, it’s repeatedly hit resistance just below $140. If you see a breakout above that level, that may be an indication that a fresh rally may be in the cards.
3 Payroll Software Makers Set For Growth In 2023

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Should you invest $1,000 in Paylocity right now?

Before you consider Paylocity, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Paylocity wasn't on the list.

While Paylocity currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Paylocity (PCTY)
4.7736 of 5 stars
$173.42+0.7%N/A58.59Moderate Buy$207.47
Automatic Data Processing (ADP)
4.4369 of 5 stars
$255.87+0.4%2.19%29.79Hold$253.17
Paychex (PAYX)
4.6339 of 5 stars
$124.64-0.1%2.86%27.70Reduce$123.17
Compare These Stocks  Add These Stocks to My Watchlist 

Kate Stalter

About Kate Stalter

  • stalterkate@gmail.com

Contributing Author

Retirement, Asset Allocation, and Tax Strategies

Experience

Kate Stalter has been a contributing writer for MarketBeat since 2021.

Additional Experience

Series 65-licensed investment advisor, financial advisor, Blue Marlin Advisors; investment columnist for Forbes, U.S. News & World Report

Areas of Expertise

Asset allocation, technical and fundamental analysis, retirement strategies, income generation, risk management, sector and industry analysis

Education

Bachelor of Arts, Saint Mary’s College, Notre Dame, Indiana; Master of Business Adminstration, Kellogg School of Management at Northwestern University

Past Experience

Founder, financial advisor for Better Money Decisions; editor, stock trading instructor for Investor’s Business Daily; columnist, podcast host, video host for MoneyShow.com; contributor for Morningstar magazine


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