Value
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.1 |
| P/S | 7.9 |
| EV/EBITDA | 3.1 |
| Fwd P/E | 8.6 |
| PEG | 7.7 |
| Analyst target | 7.5 |
- ▸Forward P/E: 13.2x
- ▸PEG: 0.88
PCTY · Why this verdict
Why Paylocity Holding (PCTY) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score6.2/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The business earns a wide economic moat score and converts net income to free cash flow at 142%, suggesting durable competitive advantages and capital-light compounding. Quality breakdown | Free cash flow conversion remains above 100% of net income and the Piotroski F-Score stays at 7 or above over the next 12 months. | →Stable |
| CounterMoat assessments can be qualitative; if competitor HR-tech platforms accelerate on AI features, switching costs could erode faster than historical patterns suggest. | ||
Paylocity has beaten analyst EPS estimates in all four of the most recent quarters, averaging a 13.5% upside surprise, which signals consistent execution above expectations. Earnings | Earnings beats continue at or above 10% average surprise over the next four quarters. | →Stable |
| CounterThe beat streak may reflect conservatively set estimates rather than genuine acceleration; revenue growth scores are modest and the company has not demonstrated accelerating top-line momentum. | ||
At a forward P/E of 12.3x and a PEG ratio of 0.84, the stock is attractively valued relative to its earnings profile, with analysts projecting 45% upside to a consensus target of $139. Sentiment breakdown | The stock price rises above $130 within 12 months as the valuation discount narrows toward analyst targets. | →Stable |
| CounterThe 45% analyst upside has not materialized due to the deep technical downtrend; if earnings estimates are revised lower, the valuation case weakens materially. | ||
Price momentum is severely negative with the moving average slope at -7.4% over 30 days, a death cross in place, and falling on-balance volume, indicating sustained selling pressure. Momentum breakdown | Momentum score improves above 4.5 within 12 months as price reclaims the 200-day moving average and OBV stabilizes. | →Stable |
| CounterMomentum indicators can reverse quickly on a single positive catalyst; the stock's near-term oversold technical position could lead to a sharp bounce before a sustained recovery. | ||
The business earns a wide economic moat score and converts net income to free cash flow at 142%, suggesting durable competitive advantages and capital-light compounding.
→StableQuality breakdown
- Expectation
- Free cash flow conversion remains above 100% of net income and the Piotroski F-Score stays at 7 or above over the next 12 months.
CounterMoat assessments can be qualitative; if competitor HR-tech platforms accelerate on AI features, switching costs could erode faster than historical patterns suggest.
Paylocity has beaten analyst EPS estimates in all four of the most recent quarters, averaging a 13.5% upside surprise, which signals consistent execution above expectations.
→StableEarnings
- Expectation
- Earnings beats continue at or above 10% average surprise over the next four quarters.
CounterThe beat streak may reflect conservatively set estimates rather than genuine acceleration; revenue growth scores are modest and the company has not demonstrated accelerating top-line momentum.
At a forward P/E of 12.3x and a PEG ratio of 0.84, the stock is attractively valued relative to its earnings profile, with analysts projecting 45% upside to a consensus target of $139.
→StableSentiment breakdown
- Expectation
- The stock price rises above $130 within 12 months as the valuation discount narrows toward analyst targets.
CounterThe 45% analyst upside has not materialized due to the deep technical downtrend; if earnings estimates are revised lower, the valuation case weakens materially.
Price momentum is severely negative with the moving average slope at -7.4% over 30 days, a death cross in place, and falling on-balance volume, indicating sustained selling pressure.
→StableMomentum breakdown
- Expectation
- Momentum score improves above 4.5 within 12 months as price reclaims the 200-day moving average and OBV stabilizes.
CounterMomentum indicators can reverse quickly on a single positive catalyst; the stock's near-term oversold technical position could lead to a sharp bounce before a sustained recovery.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Paylocity combines a perfect four-quarter earnings beat streak with an attractive forward valuation of 12.3x and a wide economic moat, but near-term momentum remains deeply negative with the stock trading below its 200-day moving average on falling volume, warranting patience before adding exposure.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
7.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 7.2 |
| ROA | 2.9 |
| Gross margin | 9.9 |
| Op margin | 10.0 |
| Net margin | 7.5 |
| Current ratio | 4.2 |
| FCF quality | 9.7 |
| Moat | 9.0 |
| Rule of 40 | 5.5 |
| Piotroski F | 8.9 |
- ▸Excellent cash conversion: 142% FCF/NI
- ▸Wide economic moat
- ▸Compounder quality: strong returns + growth
- ▸Strong Piotroski F-Score: 8/9
Growth
6.3/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.1 |
| EPS growth | 7.5 |
Momentum
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 9.8 |
| MA position | 6.0 |
| Volume | 2.1 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -7.3%/30d — confirmed downtrend
Sentiment
7.9/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 8.9 |
| Price target | 8.7 |
| erm sentiment | 5.4 |
- ▸Analyst upside: 32%
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Negligible insider selling — $293,062 (0.005% of mkt cap)
Peer rank
3.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.9 |
| quality rank | 7.1 |
| growth rank | 3.3 |
Technical
1.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.0 |
| support resistance | 1.4 |
| 52w position | 1.6 |
Risk (lower is worse)
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.5 |
| days to cover | 6.3 |
| volatility | 3.1 |
| put call | 9.7 |
| implied vol | 3.7 |
| beta | 10.0 |
| debt equity | 9.5 |
Catalyst
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 9.3 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (7)
- MOMENTUM:6.5>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:32d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:1.3<1.5@spot
Warning (1)
- DEATH_CROSS:momentum=6.5>=5.0 recovering
Reward-to-Risk
1.32
Upside
+19.2%
Downside
14.6%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 59
EdgeNo clear edge — No clear edge identified
SuitabilitySpeculative — Drawdown -42% (>40% off 52w high)
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:6.5>=5.5. Top dim: Sentiment at 7.9; weakest: Technical at 1.3. No conviction either direction.
The strongest dimensions are Sentiment at 7.9, Quality at 7.5, and Catalyst at 7.3; the weakest are Technical at 1.3, Peer rank at 3.8, and Insider at 5.0. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 1.32 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Earnings Beat Quality
Trip ifAverage quarterly EPS surprise falls below 5% for 2 consecutive quarters.
- P2Moat Fcf Quality
Trip ifFree cash flow conversion drops below 80% of net income for 1 fiscal year.
- P3Valuation Analyst Upside
Trip ifAnalyst consensus price target falls below $115, reducing projected upside to less than 10%.
- P4Momentum Downtrend Risk
Trip ifStock price drops below $95 support, extending the downtrend beyond the current 52-week low.