Please ensure Javascript is enabled for purposes of website accessibility

Why Paycom Stock Popped Today

By Evan Niu, CFA - Apr 29, 2020 at 3:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The payroll and HR software company reported first-quarter results.

What happened

Shares of Paycom Software (PAYC -0.12%) have popped today, up by 14% as of 1 p.m. EDT, after the company reported first-quarter earnings. The HR software specialist beat expectations for both the top and bottom lines but withdrew its 2020 guidance due to the COVID-19 pandemic.

So what

Revenue in the first quarter increased 21% to $242.2 million, easily topping the consensus estimate of $237.9 million. That all translated into adjusted net income of $77.9 million, or $1.33 per share. Analysts were looking for just $1.26 per share in adjusted profits. Adjusted EBITDA was $117.9 million, and Paycom finished the quarter with $181.8 million in cash and cash equivalents on the balance sheet.

Paycom logo

Image source: Paycom.

"I'm proud of our excellent first quarter results and the continued success we are having onboarding new clients," CEO Chad Richison said in a statement. "Our value proposition has never been stronger and we continue to see increased demand for the Paycom solution."

Now what

Paycom provides software for payroll and HR departments, and the business is taking a hit because it charges customers on a per-employee basis and many clients are laying off employees amid the COVID-19 crisis. The company has also transitioned 98% of its workforce to working remotely, and has halted all business-related travel.

Paycom withdrew its guidance for 2020 due to ongoing macroeconomic uncertainty, especially around unemployment. The company hopes to provide more information regarding outlook once it has more visibility, particularly once unemployment figures "become more predictable."

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Paycom Software. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Paycom Software, Inc. Stock Quote
Paycom Software, Inc.
PAYC
$398.43 (-0.12%) $0.48

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
403%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.