Critical Analysis: Paylocity (NASDAQ:PCTY) versus TaskUs (NASDAQ:TASK)

Paylocity (NASDAQ:PCTY) and TaskUs (NASDAQ:TASK) are both industrials companies, but which is the superior business? We will compare the two companies based on the strength of their risk, valuation, earnings, dividends, institutional ownership, profitability and analyst recommendations.

Volatility and Risk

Paylocity has a beta of 0.43, indicating that its share price is 57% less volatile than the S&P 500. Comparatively, TaskUs has a beta of 1.93, indicating that its share price is 93% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and price targets for Paylocity and TaskUs, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Paylocity	0	5	12	0	2.71
TaskUs	1	4	1	0	2.00

Paylocity currently has a consensus target price of $177.47, suggesting a potential upside of 2.50%. TaskUs has a consensus target price of $9.80, suggesting a potential upside of 7.81%. Given TaskUs’ higher possible upside, analysts clearly believe TaskUs is more favorable than Paylocity.

Insider & Institutional Ownership

94.8% of Paylocity shares are held by institutional investors. Comparatively, 44.6% of TaskUs shares are held by institutional investors. 20.1% of Paylocity shares are held by insiders. Comparatively, 31.9% of TaskUs shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Paylocity and TaskUs”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Paylocity	$1.77 billion	5.10	$269.74 million	$5.16	33.56
TaskUs	$1.24 billion	0.67	$102.28 million	$1.10	8.26

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

Profitability

This table compares Paylocity and TaskUs’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Paylocity	15.40%	27.59%	5.87%
TaskUs	8.22%	30.17%	11.13%

Summary

Paylocity beats TaskUs on 9 of the 14 factors compared between the two stocks.

About Paylocity

Paylocity Holding Corporation engages in the provision of cloud-based human capital management and payroll software solutions for workforce in the United States. The company offers payroll software solution for global payroll, expense management, tax services, on demand payment, and garnishment managed services; and time and labor management software for time and attendance, scheduling, and time collection. It also provides human resources (HR) software solutions for employee self-service, compliance, HR edge, data analytics, and workflows and documents, as well as human resource management system; talent management system for recruiting, onboarding, performance, compensation, and learning; and benefits administration software. In addition, the company offers employee experience platform for community, employee voice, recognition and rewards, video, and modern workforce index; HR reporting software; and mobile HR solutions. Further, it provides implementation and training, client, and tax and regulatory services. The company serves for-profit and non-profit organizations across industries, including business services, financial services, healthcare, manufacturing, restaurants, retail, technology, and others. It sells its products through sales representatives. The company was founded in 1997 and is headquartered in Schaumburg, Illinois.

About TaskUs

TaskUs, Inc. provides digital outsourcing services for companies in Philippines, the United States, India, and internationally. It offers digital customer experience that consists of omni-channel customer care services primarily delivered through non-voice digital channels; and other solutions, including experience and customer care services for new product or market launches, and customer acquisition solutions. The company also provides trust and safety solutions, such as review and disposition of user and advertiser generated visual, text, and audio content, which include removal or labeling of policy violating, and offensive or misleading content, as well as risk management, compliance, identity management, and fraud services; and artificial intelligence (AI) solutions that consist of data labeling, annotation, context relevance, and transcription services for training and tuning machine learning algorithms that enables to develop AI systems. It serves clients in various industry segments comprising e-commerce, FinTech, food delivery and ride sharing, gaming, technology, HealthTech, social media, and streaming media. The company was formerly known as TU TopCo, Inc. and changed its name to TaskUs, Inc. in December 2020. TaskUs, Inc. was founded in 2008 and is headquartered in New Braunfels, Texas.