What happened
Paycom Software (PAYC +2.22%) produced a better than expected earnings report for the second quarter, sending the stock up as much as 14.4% for the week. As of 5:16 p.m. EDT on Thursday, the stock was up 14.3% in only a few trading days.
So what
On Aug. 3, Paycom Software released its second-quarter earnings report. Revenue was up 33% to $242.1 million, with GAAP net income coming in at $52.3 million. This led Paycom's quarterly earnings per share (EPS) to hit $0.97, beating the consensus analyst estimate of $0.83. A strong EPS number is a big reason why investors bid up the stock this week.
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Investors were also likely happy to see Paycom raise its revenue guidance for the full fiscal year to $1.036 billion-$1.038 billion, up from the $1.017 billion-$1.019 billion range it gave last quarter. Paycom provides software-as-a-service (SaaS) products for payroll, employee management, and HR departments. With employment numbers ticking back up in the U.S., Paycom is likely seeing a boost in usage of its products.
Now what
Paycom Software stock has been a huge winner since going public in 2014. The stock is up almost 3,000% during its time as a publicly traded company, greatly outpacing the broad market S&P 500 index during that timespan. With a market cap of $22.2 billion, shares trade at an expensive price-to-sales ratio north of 20, which is a slight concern for anyone invested in the company. But if Paycom can keep putting up 33% revenue growth over the next few years and beyond, the stock should continue to perform well for shareholders.
