Paylocity, a payroll provider leveraging cloud technology to provide services generates a decent margin 60 - 70% typically. I generates a little over a billion dollars a year but commands $10 billion market cap.
The Price to Earnings ratio has been steadily coming down over the years to 55 - 60. The company is still enjoying over 20% revenue growth, and YOY they expect EPS growth of 38.5%. Price to earnings growth stands at 1.20 which isn't too bad for a growth company.
On less than 55 million shares, Paylocity isn't a widely held company. 23% of those shares are closely held, the float is 43 million. Shares haven't been diluted too much either.
These are all great fundamentals. Also, the stock is lingering around multi-year support. It did break that support so we'll see where we go from here.
I will keep waiting for this gap to fill (gray box) and see if it comes down more. Even if it doesn't, this company has a fairly priced valuation and is worth digging into a bit.
Despite the good revenue growth, the forward guidance of PCTY is bad. So, investors are not confident in this company; hence, the dramatic drop. The trend is still down for this stock. It looks like it will fall to 120. The relative strength of this stock compared to the S&P500 is negative. There are better investments out there: