Critical Analysis: Paylocity Holding Corporation (PCTY) and Nice Systems (NASDAQ:NICE)

Nice Systems (NASDAQ: NICE) and Paylocity Holding Corporation (NASDAQ:PCTY) are both mid-cap computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, earnings, profitability, dividends, risk, analyst recommendations and institutional ownership.

Earnings & Valuation

This table compares Nice Systems and Paylocity Holding Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Nice Systems N/A N/A N/A $1.54 48.49
Paylocity Holding Corporation $300.01 million 7.77 $18.88 million $0.12 375.42

Paylocity Holding Corporation has higher revenue and earnings than Nice Systems. Nice Systems is trading at a lower price-to-earnings ratio than Paylocity Holding Corporation, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

43.5% of Nice Systems shares are held by institutional investors. Comparatively, 63.0% of Paylocity Holding Corporation shares are held by institutional investors. 0.0% of Nice Systems shares are held by company insiders. Comparatively, 53.1% of Paylocity Holding Corporation shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

Nice Systems pays an annual dividend of $0.26 per share and has a dividend yield of 0.3%. Paylocity Holding Corporation does not pay a dividend. Nice Systems pays out 16.9% of its earnings in the form of a dividend.

Analyst Recommendations

This is a summary of current recommendations and price targets for Nice Systems and Paylocity Holding Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nice Systems 0 4 3 0 2.43
Paylocity Holding Corporation 0 6 8 0 2.57

Nice Systems currently has a consensus target price of $80.50, suggesting a potential upside of 7.81%. Paylocity Holding Corporation has a consensus target price of $51.00, suggesting a potential upside of 13.21%. Given Paylocity Holding Corporation’s stronger consensus rating and higher possible upside, analysts plainly believe Paylocity Holding Corporation is more favorable than Nice Systems.

Profitability

This table compares Nice Systems and Paylocity Holding Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Nice Systems 7.99% 11.14% 6.91%
Paylocity Holding Corporation 2.24% 6.13% 0.71%

Risk & Volatility

Nice Systems has a beta of 0.87, indicating that its stock price is 13% less volatile than the S&P 500. Comparatively, Paylocity Holding Corporation has a beta of 2.26, indicating that its stock price is 126% more volatile than the S&P 500.

Summary

Paylocity Holding Corporation beats Nice Systems on 9 of the 14 factors compared between the two stocks.

About Nice Systems

NICE Ltd., formerly NICE-Systems Ltd., is a global enterprise software provider. The Company’s segments include Customer Interactions Solutions, and Financial Crime and Compliance Solutions. The Customer Interactions Solutions segment provides data driven insights that enable businesses to deliver personalized experience to customers. The Financial Crime and Compliance Solutions segment provides real time and cross-channel fraud prevention, anti-money laundering, brokerage compliance and enterprise-wide case management. The Company serves contact centers, back office operations and retail branches, covering various industries, including communications, banking, insurance, healthcare, business processes outsourcing (BPO), government, utilities, travel and entertainment. Its Multi-Channel Recording and Interaction Management enables organizations to capture structured and unstructured customer interaction and transaction data from multiple channels.

About Paylocity Holding Corporation

Paylocity Holding Corporation is a cloud-based provider of payroll and human capital management (HCM), software solutions for medium-sized organizations. The Company’s services are provided in a software-as-a-service delivery model utilizing its cloud-based platform. The cloud-based platform provides a suite of applications using a multi-tenant architecture. The cloud-based platform features a suite of unified payroll and HCM applications. The Company, through cloud-based platform, offers various products, which include Paylocity Web Pay, Paylocity HR, Paylocity Affordable Care Act Enhanced, Paylocity Impressions, Performance Management, Self-Service HR Portals, Paylocity Recruiting, Paylocity Web Time, Paylocity Web Onboarding, and Paylocity Web Benefits and Paylocity Enterprise Benefits, Powered by bswift. The multi-tenant software platform is configurable and includes a unified suite of payroll and HCM applications, such as time and labor tracking, benefits and talent management.

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