NEW YORK (TheStreet) -- Shares of Paylocity (PCTY) - Get Report are sinking by 12.18% to $33.22 on heavy trading volume on Friday afternoon, as the Arlington Heights, IL-based company reported solid 2016 fiscal third quarter results, but provided disappointing guidance for fiscal 2017.
The provider of software solutions for payroll and human capital management said it is comfortable anticipating 25% or more in annual revenue growth in fiscal 2017, suggesting revenue of $285 million to $285 million. This is below the consensus estimate of $291 million, JMP Securities said in a note earlier today.
"While the initial FY17 guidance comes in below the consensus, we continue to like Paylocity's market opportunity in the 20-1,000 employee payroll space and think it is in the best interest of long-term investors for Paylocity to moderate out year growth expectations to 25% or more," the firm said.
After yesterday's closing bell, the company reported earnings of 21 cents per share, which topped analysts' expectations of 14 cents per share.
Revenue surged by 49% to $70.6 million year-over-year and was also above analysts' estimates of $67.3 million.
Growth in revenue was "driven by a combination of strong year-to-date sales performance combined with high penetration rates of our ACA Enhanced product in our existing client base," CEO Steve Beauchamp said in a statement.
In fiscal 2016, Paylocity sees earnings per share between 25 cents and 27 cents on revenue of $227.9 million to $228.9 million. Analysts are expecting earnings of 26 cents per share on revenue of $228.13 million.
For the 2016 fiscal fourth quarter, the company forecasts a loss of 3 cents per share to a loss of 5 cents per share on revenue of $57 million to $58 million. Analysts are looking for a loss of 4 cents per share on revenue of $57.02 million.
About 1.57 million of the company's shares changed hands by this afternoon, well above its average volume of 327,248 shares per day.
Separately, TheStreet Ratings Team has a "Sell" rating with a score of D on the stock.
This is driven by some concerns, which should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks covered.
The area that we feel has been the company's primary weakness has been its disappointing return on equity.
Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.
You can view the full analysis from the report here: PCTY