Paycom Software lit up another bright light on our 4Q18 board last night, giving us an occasion to check in on how far our overall universe has come in a very short period of time.
Since the big Banks kicked off the earnings cycle on January 14th, our recommendations have collectively soared 8%. That's a lot of profit in barely three weeks, and with 2/3 of our stocks still queued up to report there's plenty of space left for the bulls to keep running.
Yesterday was also a minor milestone because Alphabet (GOOG: $1,145, up 3% this week) and Microsoft (MSFT: $107, up 4%) have now swung back to positive territory after initially tentative response to their quarterly numbers. We told you there was nothing materially wrong with either company. It's great to see other investors catch on so fast. And now that all five of the Big Tech giants have reported, only Amazon (AMZN: $1,659, up 2%) has any lost ground to recover, and it was up $25 today.
That's true throughout our universe. Out of all the BMR stocks that have released their 4Q18 performance, Amazon has dropped 3% and PayPal (PYPL: $92, up 3%) needs to make up a few cents. Otherwise, Tesla (TSLA: $321, up 3%) came back;and Netflix (NFLX: $356, up 5%) came back. Our companies have provided good enough guidance to earn 4% in applause on average. We look forward to more.
And here's the thing: The rebound has now reached the point that all but 3% of last quarter's weakness has now evaporated. Our stocks have collectively rewound to where they were on October 5. The market as a whole still has a little more heavy lifting to do.
Either way, it's stocks like Paycom Software (PAYC: $157, up 4% as of yesterday's close and then rallying to $168 overnight, a new all-time high) that have taken us back to glory. We only expected $144 million in revenue and $32 million ($0.55 per share) in profit. We got $150 million and $0.61 per share, proving once again that margins are expanding as the company becomes a bigger player in the Human Resources Software market. Guess what our Target is: $170. Looks like we'll be moving that up in the days ahead.
Every $1 in revenue we didn't anticipate turned into $0.50 in profit. And yes, that means 30% top line growth translated into double the profit Paycom earned in 4Q17. That's the kind of steep earnings trend that all investors can cheer.
Admittedly, management didn't raise 2019 guidance more than 1%, but that still means they believe they can keep the top line moving 25% a year for the foreseeable future. From what we saw on the margins last quarter, that's going to translate into more rich profit and more upside surprises. We love it. And the stock's breaking records again.