NASDAQ:PCTY, a strong growth stock, setting up for a breakout.

Groth investors are looking for stocks showing high revenue and EPS growth. We will have a look here to see if PAYLOCITY HOLDING CORP (NASDAQ:PCTY) is suited for growth investing, while it is forming a base and may be ready to breakout. Investors should of course do their own research, but we spotted PAYLOCITY HOLDING CORP showing up in our growth with base formation screen, so it may be worth spending some more time on it.

Understanding NASDAQ:PCTY's Growth Score

Every stock receives a Growth Rating from ChartMill, ranging from 0 to 10. This rating assesses various growth aspects, including historical and projected EPS and revenue growth. NASDAQ:PCTY boasts a 8 out of 10:

• The Earnings Per Share has grown by an impressive 53.30% over the past year.
• PCTY shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 32.16% yearly.
• Looking at the last year, PCTY shows a very strong growth in Revenue. The Revenue has grown by 34.06%.
• PCTY shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 25.49% yearly.
• The Earnings Per Share is expected to grow by 17.44% on average over the next years. This is quite good.
• The Revenue is expected to grow by 16.00% on average over the next years. This is quite good.

Understanding NASDAQ:PCTY's Health Score

A critical element of ChartMill's stock evaluation is the Health Rating, which spans from 0 to 10. This rating considers multiple health factors, including liquidity and solvency, both in absolute terms and relative to industry peers. NASDAQ:PCTY has received a 7 out of 10:

• PCTY has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.
• PCTY does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

Looking at the Profitability

ChartMill assigns a proprietary Profitability Rating to each stock. The score is computed by evaluating various profitability ratios and margins and ranges from 0 to 10. NASDAQ:PCTY was assigned a score of 9 for profitability:

• The Return On Assets of PCTY (3.98%) is better than 61.25% of its industry peers.
• Looking at the Return On Equity, with a value of 16.24%, PCTY is in the better half of the industry, outperforming 73.75% of the companies in the same industry.
• PCTY's Return On Invested Capital of 17.23% is amongst the best of the industry. PCTY outperforms 81.25% of its industry peers.
• The last Return On Invested Capital (17.23%) for PCTY is above the 3 year average (11.96%), which is a sign of increasing profitability.
• PCTY has a better Profit Margin (11.70%) than 87.50% of its industry peers.
• PCTY's Profit Margin has improved in the last couple of years.
• PCTY's Operating Margin of 15.27% is amongst the best of the industry. PCTY outperforms 83.75% of its industry peers.
• PCTY's Operating Margin has improved in the last couple of years.
• Looking at the Gross Margin, with a value of 68.99%, PCTY belongs to the top of the industry, outperforming 85.00% of the companies in the same industry.
• In the last couple of years the Gross Margin of PCTY has grown nicely.

Looking at the Setup

In addition to the Technical Rating, ChartMill provides a Setup Rating for each stock. This rating, ranging from 0 to 10, assesses the extent of consolidation in the stock based on multiple short-term technical indicators. Currently, NASDAQ:PCTY has a 7 as its setup rating:

Although the technical rating is bad, PCTY does present a nice setup opportunity. We see reduced volatility while prices have been consolidating in the most recent period. There is a resistance zone just above the current price starting at 165.50. Right above this resistance zone may be a good entry point.

More Strong Growth stocks can be found in our Strong Growth screener.

Check the latest full fundamental report of PCTY for a complete fundamental analysis.

Check the latest full technical report of PCTY for a complete technical analysis.

Keep in mind

This article should in no way be interpreted as advice in any way. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.