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Today we're going to take a look at the well-established Paylocity Holding Corporation (NASDAQ:PCTY). The company's stock received a lot of attention from a substantial price increase on the NASDAQGS over the last few months. The recent share price gains has brought the company back closer to its yearly peak. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine Paylocity Holding’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
View our latest analysis for Paylocity Holding
What's The Opportunity In Paylocity Holding?
According to our valuation model, Paylocity Holding seems to be fairly priced at around 0.7% below our intrinsic value, which means if you buy Paylocity Holding today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $197.48, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, Paylocity Holding has a low beta, which suggests its share price is less volatile than the wider market.
What kind of growth will Paylocity Holding generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 58% over the next couple of years, the future seems bright for Paylocity Holding. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? PCTY’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on PCTY, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.