Spotting winners: Paycom (NYSE:PAYC) and HR software stocks in the third quarter
As we look back at HR software stocks’ third-quarter earnings, we examine this quarter’s best and worst performers, including Paycom (NYSE:PAYC) and its peers.
Modern HR software has two powerful benefits: cost savings and ease of use. To save costs, businesses of all sizes much prefer the flexibility of cloud-based software delivered through a web browser and paid for on a subscription basis, rather than the hassle and complexity of purchasing and managing business software on-premises. In terms of usability, the consumerization of enterprise software creates seamless experiences that merge multiple standalone processes, such as payroll and compliance, into a single, easy-to-use platform.
The six HR software stocks we track reported a mixed third quarter. As a group, revenues were in line with analyst consensus expectations, while revenues for the next quarter were 1.7% below that.
Fortunately, the companies’ share prices have been resilient, having risen an average of 7.9% since the last earnings results.
Founded in 1998 as one of the first online payroll companies, Paycom (NYSE:PAYC) provides software for small and medium-sized businesses (SMBs) to manage their payroll and HR needs in one place.
Paycom reported revenue of $451.9 million, up 11.2% year over year. This print exceeded analyst expectations by 1.1%. Overall, it was a strong quarter for the company, with an impressive result versus analyst EBITDA estimates.
“We delivered solid third quarter results and continue to make significant progress toward full solution automation,” said Chad Richison, founder, CEO and chairman of Paycom.
Total Paycom revenue
Interestingly, the stock is up 30% since reporting and is currently trading at $224.02.
We think Paycom is a good company, but is it a buy today? Read our full report here, it’s free.
Founded in 1990 in Cincinnati, Ohio, Paycor (NASDAQ: PYCR) provides software for small businesses to manage their payroll and HR needs in one place.
Paycor reported revenue of $167.5 million, up 16.6% year over year, and beat analyst expectations by 3.3%. The company had a strong quarter with an impressive return on analyst EBITDA estimates and a solid improvement on analyst expectations.
Paycor’s total revenue
Paycor achieved the highest revenue growth according to analysts and the fastest revenue growth among its peers. While it had a good quarter compared to its peers, the market seems unhappy with the results as the stock is down 1.6% since reporting. It is currently trading at $16.40.
Is Now the Time to Buy Paycor? See our full analysis of earnings results here. It’s free.
Asure (NASDAQ:ASUR), formed from the merger of two small workforce management companies in 2007, offers cloud-based payroll and HR software for small and medium-sized businesses (SMBs).
Asure reported revenue of $29.3 million, flat year-over-year, falling 6.5% short of analyst expectations. It was a disappointing quarter, as revenue expectations for the following quarter did not match analyst expectations.
Asure delivered the weakest performance against analyst estimates, the slowest revenue growth and the weakest full-year forecast update in the group. As expected, the stock has fallen 9.7% since the results and is currently trading at $8.97.
Read our full analysis of Asure’s results here.
Paychex (NASDAQ:PAYX), one of the oldest service providers in the industry, offers payroll and HR software solutions to its customers.
Paychex reported revenue of $1.32 billion, up 2.5% year over year. This print was in line with analyst expectations. Overall, it was a satisfying quarter, as it also significantly beat analysts’ EBITDA estimates.
The stock is up 5.8% since reporting and is currently trading at $141.92.
Read our full, actionable report on Paychex here. It’s free.
Dayforce (NYSE:DAY), founded in 1992 as Ceridian, an outsourced payroll processor and transformed following the acquisition of Dayforce in 2012, is a provider of cloud-based payroll and HR software aimed at mid-market companies.
Dayforce reported revenue of $440 million, up 16.6% year over year. This print exceeded analyst expectations by 2.7%. More broadly, it was a mixed quarter, as it also delivered an impressive profit versus analysts’ EBITDA estimates.
The stock is up 16.2% since reporting and is currently trading at $75.91.
Read our full, actionable report on Dayforce here. It’s free.
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady downward trend, returning to the 2% sweet spot. Fortunately (miraculously for some) all this tightening hasn’t sent the economy into recession, so here we are, cautiously celebrating a soft landing. The icing on the cake? Recent interest rate cuts (half a point in September, a quarter in November) have kept equity markets roiling in 2024, especially after Trump’s victory in November lit a fire under the major indices and sent them to record highs. There’s still plenty to think about, though: tariffs, corporate tax cuts and what 2025 could mean for the economy.
Do you want to invest in winners with rock-solid fundamentals? Check out our Top 5 High Quality Compounder Stocks and add them to your watchlist. These companies are primed for growth regardless of the political or macroeconomic environment.
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