Value
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 3.8 |
| P/S | 6.9 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 7.2 |
| PEG | 5.5 |
| Analyst target | 4.0 |
- ▸Forward P/E: 17.4x
- ▸PEG: 1.37
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. How we score · Editorial policy
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VerdictHOLD
Overall score6.0/10
ConfidenceMEDIUM
MacroRISK_OFF
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.
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. | ↓Deteriorating |
| 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. | ↑Improving |
| 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. | ↓Deteriorating |
| 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.
↓DeterioratingEarnings
- 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.
↑ImprovingSentiment 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.
↓DeterioratingMomentum 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.
Per-dimension breakdown
Quality
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 7.3 |
| ROA | 3.5 |
| Gross margin | 9.9 |
| Op margin | 7.6 |
| Net margin | 7.6 |
| Current ratio | 4.3 |
| FCF quality | 9.4 |
| Moat | 9.0 |
| Rule of 40 | 5.5 |
| Piotroski F | 8.9 |
- ▸Strong margins: 15%
- ▸Excellent cash conversion: 133% FCF/NI
- ▸Wide economic moat
- ▸Compounder quality: strong returns + growth
Growth
6.3/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.2 |
| EPS growth | 7.5 |
Momentum
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 9.0 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
7.7/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.8 |
| Analyst rating | 9.0 |
| Price target | 6.1 |
- ▸LLM news sentiment: +0.55 (n=2)
Insider
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 3.0 |
| insider conviction | 2.0 |
| holder change | 8.9 |
| notable moves | 5.0 |
- ▸Notable insider selling — $39,904,948 (0.454% of mkt cap)
- ▸Institutions accumulating
Peer rank
5.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.3 |
| quality rank | 6.9 |
| growth rank | 4.1 |
Technical
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.9 |
| support resistance | 3.5 |
| 52w position | 8.7 |
Risk (lower is worse)
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.4 |
| days to cover | 6.0 |
| volatility | 5.7 |
| put call | 9.6 |
| implied vol | 4.5 |
| max pain risk | 3.0 |
| beta | 10.0 |
| debt equity | 9.6 |
| news risk | 6.0 |
- ▸Above max pain $105
Catalyst
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 9.2 |
| news activity | 6.0 |
- ▸Perfect beat streak: 4Q
- ▸Earnings in 7 days
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position. | News modifier +1 (SELL_IF_HOLDING → HOLD_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_SELL|L3:NEWS_MOD=+1Passed (4)
- MOMENTUM:4.8>=4.5
- NEWS_BOOST:ANALYST:0.50
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:-0.2=NEGATIVE
- EARNINGS_PROXIMITY:7d<=7d
Warning (3)
- MOMENTUM:4.8<5.5 (soft — BUY_NOW allowed but watch)
- INSIDER:0.45%=MODERATE
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.23
Upside
-3.1%
Downside
13.4%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 67, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.4 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Sentiment at 7.7) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.2=NEGATIVE, EARNINGS_PROXIMITY:7d<=7d) reinforce the read. Current asymmetry R:R is -0.23 — supplementary context, not the trigger for this path.
The strongest dimensions are Sentiment at 7.7, Quality at 7.3, and Catalyst at 7.0; the weakest are Insider at 4.7, Momentum at 4.8, and Value at 4.8. The V9 engine flagged 2 failed gates with 3 warnings, producing an asymmetric reward-to-risk of -0.23 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.