June 29, 2023
Top 10 Stock Paylocity Strong Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Paylocity – Top 10 Stock in S&P Mid-Cap Index
Paylocity is listed as a top 10 stock on June 29, 2023 in the market index S&P MIDCAP because of its high performance in at least one of the Obermatt investment strategies. Three consolidated Obermatt Ranks are above-average. Only the Value Rank is below average. The investment rationale may be an investment in future growth, supported by professional market opinion. Based on the Obermatt 360° View of 88 (top 88% performer), Obermatt assesses an overall strong buy recommendation for Paylocity on June 29, 2023.
Snapshot: Obermatt Ranks
Country | USA |
Industry | Application Software |
Index | NASDAQ, S&P MIDCAP |
Size class | Large |
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When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Paylocity Strong Buy
360 METRICS | June 29, 2023 | |||||||
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VALUE | ||||||||
VALUE | 43 |
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GROWTH | ||||||||
GROWTH | 85 |
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SAFETY | ||||||||
SAFETY | 99 |
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SENTIMENT | ||||||||
SENTIMENT | 92 |
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360° VIEW | ||||||||
360° VIEW | 88 |
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ANALYSIS: With an Obermatt 360° View of 88 (better than 88% compared with alternatives) for 2022, overall professional sentiment and financial characteristics for the stock Paylocity are very positive. The 360° View is based on consolidating four consolidated indicators, with all but one indicator above average for Paylocity. The consolidated Growth Rank has a good rank of 85, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth, as well as stock returns. This means that growth is higher than for 85% of competitors in the same industry. The consolidated Safety Rank at 99 means that the company has a financing structure that is safer than 99% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. Finally, the consolidated Sentiment Rank has a good rank of 92, which means that professional investors are more optimistic about the stock than for 92% of alternative investment opportunities. But the consolidated Value Rank is less desirable at 43, meaning that the share price of Paylocity is on the higher side compared with indicators such as revenues, profits, and invested capital. This means the stock price is higher than for 57% of alternative stocks in the same industry. ...read more
RECOMMENDATION: With a consolidated 360° View of 88, Paylocity is better positioned than 88% of all alternative stock investment opportunities based on the Obermatt Method. As three out of four consolidated Obermatt Ranks exhibit excellent performance, such as above-average growth (Growth Rank of 85), a safe financing structure (Safety Rank of 99), and positive professional market sentiment (Sentiment Rank of 92), it is a solid stock investment where growth may be the strongest driver of the investment rationale, also reflected by institutional investors. It is typical for growth companies to have low value, as is the case here. Investors are willing to pay more for companies that outperform their competitors. So the question is, how much more do you pay for the stock of Paylocity compared with alternatives? You can use the following rule of thumb: The growth rank measures the growth momentum of the company (85% better than peers). The value rank could be the reverse reflection of that (15%). A Value Rank below that level may be assessed as expensive, a rank above that is still good value. Sometimes market sentiment just reflects the past, sometimes the reality. You pay more than the market average for this stock, but it may be worth it. ...read more
Sentiment Strategy: Professional Market Sentiment for Paylocity very positive
ANALYSIS: With an Obermatt Sentiment Rank of 92 (better than 92% compared with alternatives) for 2022, overall professional sentiment and engagement for the stock Paylocity is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all four indicators above average for Paylocity. Analyst Opinions are at a rank of 68 (better than 68% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. Analyst Opinions Change is also positive with a rank of 55, which means that stock research experts are changing their opinions for the better and recommending investing in the company. They are getting more optimistic about stock investments in Paylocity. The Professional Investors rank is 55, which means that currently, professional investors hold more stock in this company than in 55% of alternative investment opportunities. Pros tend to favor investing in this company. Finally, Market Pulse has a rank of 97 which means that the current professional news and professional social networks are on the positive side when discussing this company (more positive news than for 97% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 92 (more positive than 92% compared with investment alternatives), Paylocity has a reputation among professional investors that is significantly higher than that of its competitors. Since all market sentiment indicators are positive, the professional community highly recommends investment in the company. Does this mean Paylocity stocks are a safe investment? Far from it. Even professionals make mistakes. Especially in stock investing, there is a tendency to follow the leaders. Since trees don't grow to the heavens, such positive sentiment may also be interpreted as a danger sign. A lot of optimism can often be a sign of troubles to come, albeit unforeseen by most. ...read more
Value Strategy: Paylocity Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 43 (worse than 57% compared with alternatives), Paylocity shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for Paylocity. Only Price-to-Profit (also referred to as price-earnings, P/E) indicates good stock value with a rank of 72, which means that the stock price compared with what market professionals expect for future profits is lower than for 72% of comparable companies, indicating a good value concerning Paylocity's profit levels. But Price-to-Sales is 31 which means that the stock price compared with what market professionals expect for future profits is higher than for 69% of comparable companies, indicating a low value concerning Paylocity's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 27 and for dividend yield, which is lower than for 99% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 43, is a hold recommendation based on Paylocity's stock price compared with the company's operational size and dividend yields. Can we rely on only one good value indicator? Only if we know the company well. In this case, a high Price-to-Profit Rank, while Price-to-Sales and Price-to-Book are both below the market typical levels, means that the company can charge higher prices for its products and needs less capital to produce them. If this is sustainable, then Paylocity is a good investment because profits count most in enterprise valuations. The low dividend yield indicates that the company is confident it can do something with the generated cash that is more valuable than paying the profits out to the shareholders in the form of dividends. ...read more
Growth Strategy: Paylocity Growth Momentum high
ANALYSIS: With an Obermatt Growth Rank of 85 (better than 85% compared with alternatives) for 2022, Paylocity shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for Paylocity. Sales Growth has a value of 82 which means that currently professionals expect the company to grow more than 82% of its competitors. Profit Growth with a value of 55 and Capital Growth with a rank of 96 means that currently, professionals expect the company to grow both profits and invested capital more than of its competitors. But Stock Returns has only a rank of 49, which means that stock returns have recently been below 51% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 85, is a buy recommendation for growth and momentum investors. Paylocity has only one below-average growth indicator, the stock returns. This is probably the least reliable growth indicator, because it measures company and investor expectations at the same time. The three other growth indicators, which are all positive for Paylocity, are more reliable measures of growth momentum. For this reason, the company seems to be on a good trajectory, unless you think the current period is not representative, because of unique events that will not be repeated in the future. ...read more
Safety Strategy: Paylocity Debt Financing Safety very solid
SAFETY METRICS | June 29, 2023 | |||||||
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LEVERAGE | ||||||||
LEVERAGE | 100 |
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REFINANCING | ||||||||
REFINANCING | 15 |
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LIQUIDITY | ||||||||
LIQUIDITY | 94 |
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CONSOLIDATED RANK: SAFETY | ||||||||
CONSOLIDATED RANK: SAFETY | 99 |
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ANALYSIS: With an Obermatt Safety Rank of 99 (better than 99% compared with alternatives) for 2022, the company Paylocity has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Paylocity is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above average for Paylocity. Leverage is at a rank of 100, meaning the company has a below-average debt-to-equity ratio. It has less debt than 100% of its competitors. Liquidity is also good at a rank of 94, meaning the company generates more profit to service its debt than 94% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 15, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 85% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 99 (better than 99% compared with alternatives), Paylocity has a financing structure that is significantly safer than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for Paylocity. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. ...read more
Combined financial peformance: Paylocity Above-Average Financial Performance
COMBINED PERFORMANCE | June 29, 2023 | |||||||
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VALUE | ||||||||
VALUE | 43 |
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GROWTH | ||||||||
GROWTH | 85 |
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SAFETY | ||||||||
SAFETY | 94 |
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COMBINED | ||||||||
COMBINED | 66 |
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ANALYSIS: With an Obermatt Combined Rank of 66 (better than 66% compared with investment alternatives), Paylocity (Application Software, USA) shares have above-average financial characteristics compared with similar stocks. Shares of Paylocity are low in value (priced high) with a consolidated Value Rank of 43 (worse than 57% of alternatives). But they show above-average growth (Growth Rank of 85) and are safely financed (Safety Rank of 99, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 66, is a buy recommendation based on Paylocity's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Paylocity exhibits low value (Obermatt Value Rank of 43), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 85). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 99) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). ...read more
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