Market Commentary

McCaul Loses as Paycom Sinks 35% on Guidance Cut

Huzaifa Waseem
6 Feb 2024 · 1 minute read

Paycom Software (PAYC:US) shares fell dramatically on Wednesday after the payments company made a downward revision of its full-year forecast

Moreover, the company's quarterly earnings update has prompted multiple brokerages to downgrade their rating on the stock. 

Adjusted earnings per share came in at $1.77, up from $1.27 year-on-year and exceeding the estimated $1.60. 

Revenue for the quarter reached $406.3 million, marking a 22% increase compared to the same period the previous year. However, this figure fell slightly short of the estimated $411.1 million.

“Our third quarter fundamentals were strong with solid revenue and earnings growth,” said Paycom’s founder, chairman and CEO, Chad Richison.

Paycom Software anticipates fourth-quarter revenue in the range of $420 million to $425 million, which is notably below the average analyst estimate of $452.3 million.

Full-year revenue is now seen in the range of $1.679 billion to $1.684 billion.

At least six Wall Street brokerages downgraded shares following the guidance cut.

"We are downgrading PAYC to Neutral due to revenue deceleration; growth of 10%+ vs. 25%+ previously; and potential operational changes that need to be made to protect margins," Piper Sandler analysts wrote in a note.

Congressman Michael McCaul was aggressively buying the stock back in August while it was trading just below the $300 mark.

PAYC shares now trade around $160 following Wednesday’s selloff.