Paylocity Holding (PCTY:NAS) Fundamental Valuation Report

Fundamental Valuation Report

Paylocity Holding(PCTY:NAS)

Technology:Software – Application

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Close Price/Date
$137.40 (USD) 09/04/2020

Weighted Valuation
$138.21 (USD)

Overall Rating
Fairly valued to slightly Undervalued by 0.6%

Valuation Models Adjusted Book Value: $121.92 (USD)
Multiples: $126.45 (USD)
Valuation Methods This company is:
Cash Flow: Overvalued on a Cash Flow Valuation
Comparable Company: Overvalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation
According to Analyst consensus at $153.00 this stock is Undervalued

Company Overview (PCTY:NAS USD)

Price 137.40
Range 130.95 – 142.24
52 week 74.02 – 152.99
Open 140.92
Vol / Avg. 385379/388324
Mkt cap 7.39B
P/E 119.48
Div/yield 0.00/0.00
EPS 1.15
Shares 53.81M
Beta 1.59

Company Description

Paylocity Holding Corp is a fast-growing provider of cloud-based human capital management applications. Now with more than 20,000 customers, the firm targets small and midsize businesses in the United States. Its suite is delivered via the web and focuses on payroll but also includes features for time and labor management, talent management, and human resources management.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for PCTY:NAS

Using a discounted cash flow model we generated an intrinsic value of $29.42 (USD) for PCTY:NAS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

PCTY:NAS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $29.42 1% 5% 1% 5%
WACC (or Ke) 11.34 $33.56 $26.17
Terminal Growth Rate 3.00 $26.60 $33.01
Tax Rate 0.04 $31.08 $27.77
Cash Flow 177,752,179 $27.73 $31.11
Capital Expenditures -17,391,000 $29.28 $29.56
Long Term Debt 0 $29.42 $29.42

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $82.60 (USD) for PCTY:NAS. We also generated a valuation of $117.11 (USD) using other metrics and comparables.
The comparable companies were LivePerson (LPSN:NAS), Manhattan Associates (MANH:NAS), Aspen Technology (AZPN:NAS), National Instruments (NATI:NAS) and Nuance Communications (NUAN:NAS).

Company PCTY:NAS End Date Value
Earnings/Share $1.15 (USD)
Book Value/Share $7.30 (USD)
Sales/Share $10.06 (USD)
Cash Flow/Share $2.02 (USD)
EBITDA/Share $1.87 (USD)
Price Based on Comps Adjustment Factor (%)
$50.50 (USD) 0.0
$133.11 (USD) 0.0
$87.41 (USD) 0.0
$63.26 (USD) 84.1
$61.82 (USD) -66.7
119.48 PE Ratio 43.91 0.00 69.89 39.01 18.18 48.55
18.82 PB Ratio 18.23 23.96 38.65 17.55 3.61 7.39
13.66 PS Ratio 8.69 10.27 9.94 14.90 3.49 4.85
68.07 PCF Ratio 32.95 0.00 44.55 36.15 19.41 31.67
70.04 EV to EBITDA 33.15 0.00 48.51 29.40 20.96 33.72


Using a multiples approach we generated a valuation of  $126.45 (USD) for PCTY:NAS

Company PCTY:NAS End Date Value
Earnings/Share $1.15 (USD)
Book Value/Share $7.30 (USD)
Sales/Share $10.06 (USD)
Cash Flow/Share $2.02 (USD)
EBITDA/Share $1.87 (USD)
Price Based on Comps Adjustment Factor
$149.63 (USD) 0
$125.13 (USD) 0
$99.33 (USD) 0
$103.76 (USD) 0
$154.41 (USD) 0
Ratios Ratio Average
PE Ratio 130.11
PB Ratio 17.14
PS Ratio 9.88
PCF Ratio 51.40
EV to EBITDA 82.79

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  PCTY:NAS for the last 6 years was  16.69

We ran the Adjusted Book Value for  PCTY:NAS and generated a book value of  $7.30 (USD)
By multiplying these we get an adjusted valuation of  $121.92 (USD)

Analyst Data

In the Stockcalc database there are 2 analysts that provide a valuation for PCTY:NAS. The 2 analysts have a concensus valuation for PCTY:NAS for 2021 of $153.00 (USD).

PCTY:NAS Paylocity Holding

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
2 1 0 3.7500 Outperform 2020-9-3

Current Price: 137.4 USD

Analyst Consensus
USD Millions 2021 2022 2023
Mean EPS 1.69 2.11 2.54
# EPS Analysts 4 3 2
Mean Revenue 618.50 758.70 928.60
# Revenue Analysts 3 3 1
Mean Target Price 153.00
Mean Cash Flow 2.12 3.00
Mean EBITDA 67.00 141.00
Mean Net Income 88.40 133.60 155.20
Mean Debt Outstanding
Mean Tax Rate 23.00 23.00 23.00
Mean Growth Rate 21.92
Mean Capital Expenditure 21.50 25.10

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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