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Paycom and POOLCORP have been highlighted as Zacks Bull and Bear of the Day
Read MoreHide Full Article
For Immediate Release
Chicago, IL – July 10, 2024 – Zacks Equity Research shares Paycom Software, Inc. (PAYC - Free Report) as the Bull of the Day and POOLCORP (POOL - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Qualcomm Inc. (QCOM - Free Report) , Microsoft Corp. (MSFT - Free Report) and Intel Corp. (INTC - Free Report) .
Paycom Software, Inc. is growing its cloud-based HR software business in 2024. This Zacks Rank #1 (Strong Buy) is expected to see double digit sales growth both in 2024 and 2025.
Paycom Software is a leading provider of cloud-based human capital management software, including for HR and payroll. It's a mid-cap company with a market cap of $8.1 billion.
Another Earnings Beat in Q1 2024
On May 1, 2024, Paycom Software reported its first quarter 2024 results and beat on the Zacks Consensus by $0.16. Earnings were $2.59 versus the consensus of $2.43.
An earnings beat shouldn't be surprising as Paycom has a perfect 5-year earnings surprise track record. That is impressive given that many companies were not able to hold onto their earnings surprise streaks during the pandemic.
Revenue was up 10.7% to $499.9 million from $451.6 million a year ago.
Zero Debt and Plenty of Cash
Paycom Software had debt of $0 as of Mar 31, 2024. But it also had cash and cash equivalents of $371.3 million as of Mar 31, 2024, up from $294 million as of Dec 31, 2023.
And that was even after Paycom paid $21.2 million cash dividends and repurchased $3.1 million in stock during the first quarter.
The dividend is yielding 1.1%.
Analysts Remain Bullish on 2024
Paycom Software gave full year sales guidance of a range of $1.86 to $1.885 billion. The Zacks Consensus is looking for $1.87 billion, which is sales growth of 10.2%.
1 estimate was revised higher for 2024 earnings in the last 30 days, pushing the Zacks Consensus up to $7.71 from $7.69. That is still a decline in earnings of 0.5% as the company made $7.75 last year.
But analysts expect earnings to jump another 11.4% in 2025, as the Zacks Consensus is looking for $8.60.
Shares at 5-Year Lows
Despite the bullish fundamentals, the Street has been negative on Paycom's stock for several years. In fact, the stock peaked in 2021 and has now slid to a new 5-year low.
Because of the stock slide, it now has attractive fundamentals. Paycom trades with a forward P/E of 18.2.
For investors looking for a software stock with attractive fundamentals and no debt, Paycom Software should be on your short list.
POOLCORP is seeing a slowdown in pool demand this summer. This Zacks Rank #5 (Strong Sell) recently lowered full year guidance.
POOLCORP is the world's largest wholesale distributor of swimming pool and related outdoor living products. It operates about 440 sales centers in North America, Europe and Australia from where it distributes more than 200,000 products to 125,000 wholesale customers.
POOLCORP Warns on the Full Year
On June 24, 2024, POOLCORP warned on the full year as discretionary pool spending has slowed. The company believed that new construction pool activity could be down 15% to 20% for the year with remodel activity down as much as 15%.
For the year-to-date period, POOLCORP's sales were trending down approximately 6.5% from the same period in 2023. While swimming pools and outdoor living projects are expected to decline, it was encouraged as maintenance-related product sales remained stable.
There's been volume growth in chemicals, and equipment sales, excluding cleaners, were down only 2% for the year. That was an improvement from the 3% decline in the first quarter of the year.
Full Year Guidance Slashed
Given the pool slowdown, it's not a surprise that POOLCORP cut its full year guidance. It lowered the range to $11.04 to $11.44 from $13.19 to $14.19.
The analysts followed by cutting their earnings estimates. 5 estimates were cut after the company warned.
It has pushed the Zacks Consensus Estimate down to $11.10 from $13.21. That's at the low end of the company's guidance range.
This is an earnings decline of 16.9% from 2023 as the company made $13.35 last year.
Shares Fall to New 52-Week Lows
Not surprising, the shares fell on the guidance warning and are now down 23.7% year-to-date.
But with the earnings being cut, the shares aren't that cheap. It's trading at 27x forward earnings.
POOLCORP also pays a dividend, currently yielding 1.6%.
POOLCORP will be reporting second quarter results on July 25, 2024 so the company will give more color then.
But until the pool slowdown hits a bottom, investors might want to stay on the sidelines. Watch the earnings estimates for signs of a turnaround.
Additional content:
AI PCs: The New Arena for Tech Titans
Tech giants like Qualcomm Inc. and Microsoft Corp. are reportedly embarking on an ambitious marketing blitz to promote a new breed of computers known as “AI PCs.” These machines promise advanced artificial intelligence (AI) features embedded in their hardware, distinguishing them from standard laptops and desktops.
What Sets AI PCs Apart?
AI PCs incorporate an additional processor designed specifically to accelerate AI capabilities. This specialized hardware enhances features like personal assistants and task automation. To boost mass-scale adoption, the industry aims to offer a broader range of AI PCs and develop software that leverages the new hardware's capabilities.
Initial Skepticism and Software Gaps
Despite the hype, industry experts remain skeptical about the immediate utility of AI PCs. The primary concern is the limited software support beyond Microsoft's offerings. Leading software developers, including Adobe, Salesforce and SentinelOne, are yet to optimize their applications for on-device AI, favoring cloud-based AI solutions instead. Although smaller developers like Blackmagic Design and Algoriddim have taken steps to optimize their software, these efforts are still in the nascent stages of development.
The Marketing Challenge
The success of AI PCs hinges on effective marketing and consumer education. Qualcomm, the provider of the new AI chips, aims to challenge Intel Corp.'s market dominance. PC makers such as Dell Technologies and HP are banking on AI PCs to reignite consumer interest in personal computers. However, these companies must ensure that the performance of AI PCs lives up to the marketing promises to avoid past pitfalls like the short-lived Windows mobile operating system.
Potential Market Impact and Adoption
Despite limited current features, AI PCs hold the potential to drive a new wave of higher-priced PC purchases. As many consumers, businesses and schools have not upgraded their laptops since the early pandemic days, the introduction of AI capabilities could steer buyers toward more advanced models. This, in turn, could trigger higher adoption of tech-savvy AI PCs in the near future.
Battery Life and Compatibility Issues
One of the significant selling points of AI PCs is their enhanced battery life. Qualcomm's efficient chips, based on Arm Holdings Plc designs, promise extended use without frequent charging. However, the different chip architecture raises potential compatibility issues with existing software designed for Intel or Advanced Micro Devices processors. While major applications like Microsoft Office and Adobe Photoshop have been optimized for Arm-based systems, many legacy business applications remain unsupported, potentially limiting enterprise adoption.
Marketing Investments and Future Outlook
Qualcomm is intensifying its marketing efforts, including a $75 million annual sponsorship of Manchester United Football Club and increased payments to PC makers for promotional support. Such sustained marketing efforts over a longer period are apparently required to establish Qualcomm's presence in the PC market for increased visibility and top-of-the-mind recall.
Challenges for Established Players
The entry of Qualcomm and Microsoft into the AI PC market poses a challenge to established players like Intel. Both Intel and AMD are expected to release their own AI PCs later this year, which may offer better compatibility with existing software. However, widespread consumer and business adoption of AI PCs is expected to be gradual, with the battlefield getting murkier with increased competition.
End Note
The push for AI PCs represents a significant shift in the personal computer market. With the combined marketing efforts of tech giants like Qualcomm and Microsoft, the AI PC could become a mainstream product in the coming years. While challenges remain, particularly in software support and compatibility, the potential for enhanced functionality and extended battery life positions AI PCs as a compelling option for future buyers.
Why Haven’t You Looked at Zacks' Top Stocks?
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Today you can access their live picks without cost or obligation.
Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index.Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Paycom and POOLCORP have been highlighted as Zacks Bull and Bear of the Day
For Immediate Release
Chicago, IL – July 10, 2024 – Zacks Equity Research shares Paycom Software, Inc. (PAYC - Free Report) as the Bull of the Day and POOLCORP (POOL - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Qualcomm Inc. (QCOM - Free Report) , Microsoft Corp. (MSFT - Free Report) and Intel Corp. (INTC - Free Report) .
Here is a synopsis of all five stocks.
Bull of the Day:
Paycom Software, Inc. is growing its cloud-based HR software business in 2024. This Zacks Rank #1 (Strong Buy) is expected to see double digit sales growth both in 2024 and 2025.
Paycom Software is a leading provider of cloud-based human capital management software, including for HR and payroll. It's a mid-cap company with a market cap of $8.1 billion.
Another Earnings Beat in Q1 2024
On May 1, 2024, Paycom Software reported its first quarter 2024 results and beat on the Zacks Consensus by $0.16. Earnings were $2.59 versus the consensus of $2.43.
An earnings beat shouldn't be surprising as Paycom has a perfect 5-year earnings surprise track record. That is impressive given that many companies were not able to hold onto their earnings surprise streaks during the pandemic.
Revenue was up 10.7% to $499.9 million from $451.6 million a year ago.
Zero Debt and Plenty of Cash
Paycom Software had debt of $0 as of Mar 31, 2024. But it also had cash and cash equivalents of $371.3 million as of Mar 31, 2024, up from $294 million as of Dec 31, 2023.
And that was even after Paycom paid $21.2 million cash dividends and repurchased $3.1 million in stock during the first quarter.
The dividend is yielding 1.1%.
Analysts Remain Bullish on 2024
Paycom Software gave full year sales guidance of a range of $1.86 to $1.885 billion. The Zacks Consensus is looking for $1.87 billion, which is sales growth of 10.2%.
1 estimate was revised higher for 2024 earnings in the last 30 days, pushing the Zacks Consensus up to $7.71 from $7.69. That is still a decline in earnings of 0.5% as the company made $7.75 last year.
But analysts expect earnings to jump another 11.4% in 2025, as the Zacks Consensus is looking for $8.60.
Shares at 5-Year Lows
Despite the bullish fundamentals, the Street has been negative on Paycom's stock for several years. In fact, the stock peaked in 2021 and has now slid to a new 5-year low.
Because of the stock slide, it now has attractive fundamentals. Paycom trades with a forward P/E of 18.2.
For investors looking for a software stock with attractive fundamentals and no debt, Paycom Software should be on your short list.
Bear of the Day:
POOLCORP is seeing a slowdown in pool demand this summer. This Zacks Rank #5 (Strong Sell) recently lowered full year guidance.
POOLCORP is the world's largest wholesale distributor of swimming pool and related outdoor living products. It operates about 440 sales centers in North America, Europe and Australia from where it distributes more than 200,000 products to 125,000 wholesale customers.
POOLCORP Warns on the Full Year
On June 24, 2024, POOLCORP warned on the full year as discretionary pool spending has slowed. The company believed that new construction pool activity could be down 15% to 20% for the year with remodel activity down as much as 15%.
For the year-to-date period, POOLCORP's sales were trending down approximately 6.5% from the same period in 2023. While swimming pools and outdoor living projects are expected to decline, it was encouraged as maintenance-related product sales remained stable.
There's been volume growth in chemicals, and equipment sales, excluding cleaners, were down only 2% for the year. That was an improvement from the 3% decline in the first quarter of the year.
Full Year Guidance Slashed
Given the pool slowdown, it's not a surprise that POOLCORP cut its full year guidance. It lowered the range to $11.04 to $11.44 from $13.19 to $14.19.
The analysts followed by cutting their earnings estimates. 5 estimates were cut after the company warned.
It has pushed the Zacks Consensus Estimate down to $11.10 from $13.21. That's at the low end of the company's guidance range.
This is an earnings decline of 16.9% from 2023 as the company made $13.35 last year.
Shares Fall to New 52-Week Lows
Not surprising, the shares fell on the guidance warning and are now down 23.7% year-to-date.
But with the earnings being cut, the shares aren't that cheap. It's trading at 27x forward earnings.
POOLCORP also pays a dividend, currently yielding 1.6%.
POOLCORP will be reporting second quarter results on July 25, 2024 so the company will give more color then.
But until the pool slowdown hits a bottom, investors might want to stay on the sidelines. Watch the earnings estimates for signs of a turnaround.
Additional content:
AI PCs: The New Arena for Tech Titans
Tech giants like Qualcomm Inc. and Microsoft Corp. are reportedly embarking on an ambitious marketing blitz to promote a new breed of computers known as “AI PCs.” These machines promise advanced artificial intelligence (AI) features embedded in their hardware, distinguishing them from standard laptops and desktops.
What Sets AI PCs Apart?
AI PCs incorporate an additional processor designed specifically to accelerate AI capabilities. This specialized hardware enhances features like personal assistants and task automation. To boost mass-scale adoption, the industry aims to offer a broader range of AI PCs and develop software that leverages the new hardware's capabilities.
Initial Skepticism and Software Gaps
Despite the hype, industry experts remain skeptical about the immediate utility of AI PCs. The primary concern is the limited software support beyond Microsoft's offerings. Leading software developers, including Adobe, Salesforce and SentinelOne, are yet to optimize their applications for on-device AI, favoring cloud-based AI solutions instead. Although smaller developers like Blackmagic Design and Algoriddim have taken steps to optimize their software, these efforts are still in the nascent stages of development.
The Marketing Challenge
The success of AI PCs hinges on effective marketing and consumer education. Qualcomm, the provider of the new AI chips, aims to challenge Intel Corp.'s market dominance. PC makers such as Dell Technologies and HP are banking on AI PCs to reignite consumer interest in personal computers. However, these companies must ensure that the performance of AI PCs lives up to the marketing promises to avoid past pitfalls like the short-lived Windows mobile operating system.
Potential Market Impact and Adoption
Despite limited current features, AI PCs hold the potential to drive a new wave of higher-priced PC purchases. As many consumers, businesses and schools have not upgraded their laptops since the early pandemic days, the introduction of AI capabilities could steer buyers toward more advanced models. This, in turn, could trigger higher adoption of tech-savvy AI PCs in the near future.
Battery Life and Compatibility Issues
One of the significant selling points of AI PCs is their enhanced battery life. Qualcomm's efficient chips, based on Arm Holdings Plc designs, promise extended use without frequent charging. However, the different chip architecture raises potential compatibility issues with existing software designed for Intel or Advanced Micro Devices processors. While major applications like Microsoft Office and Adobe Photoshop have been optimized for Arm-based systems, many legacy business applications remain unsupported, potentially limiting enterprise adoption.
Marketing Investments and Future Outlook
Qualcomm is intensifying its marketing efforts, including a $75 million annual sponsorship of Manchester United Football Club and increased payments to PC makers for promotional support. Such sustained marketing efforts over a longer period are apparently required to establish Qualcomm's presence in the PC market for increased visibility and top-of-the-mind recall.
Challenges for Established Players
The entry of Qualcomm and Microsoft into the AI PC market poses a challenge to established players like Intel. Both Intel and AMD are expected to release their own AI PCs later this year, which may offer better compatibility with existing software. However, widespread consumer and business adoption of AI PCs is expected to be gradual, with the battlefield getting murkier with increased competition.
End Note
The push for AI PCs represents a significant shift in the personal computer market. With the combined marketing efforts of tech giants like Qualcomm and Microsoft, the AI PC could become a mainstream product in the coming years. While challenges remain, particularly in software support and compatibility, the potential for enhanced functionality and extended battery life positions AI PCs as a compelling option for future buyers.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index.Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.