Paycom Software Inc
Exchange: NYSESector: TechnologyIndustry: Software - Application
For over 25 years, Paycom Software, Inc. has simplified business and employees’ lives through easy-to-use HR and payroll technology to empower transparency through direct access to their data. From onboarding and benefits enrollment to talent management and more, Paycom’s employee-first technology leverages full-solution automation to streamline processes, drive efficiencies and give employees power over their own HR information, all in a single app. Paycom’s single database combines all HR and payroll data in one place, providing a seamless and accurate experience without the errors and inefficiencies associated with integrating multiple systems. Recognized globally for its technology and workplace culture, Paycom serves businesses of all sizes in the U.S. and internationally.
Did you know?
Trading 117% below its estimated fair value of $272.90.
Current Price
$125.50
-3.78%GoodMoat Value
$272.90
117.5% undervaluedProfile
Valuation (TTM)
Market Cap$7.06B
P/E15.58
EV$6.84B
P/B4.08
Shares Out56.27M
P/Sales3.44
Revenue$2.05B
EV/EBITDA8.49
Paycom Software Inc (PAYC) Stock Analysis
GoodMoat Analysis
Paycom appears to be a fundamentally strong business with a high-quality profile, but its moat durability is unclear. The stock is currently priced at a significant discount to the GoodMoat target, suggesting a potentially favourable valuation.
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Paycom Software Inc provides a comprehensive, cloud-based human capital management (HCM) platform. The business exhibits strong quality indicators, with a high ROE of 26.2%, a robust operating margin of 27.6%, and a healthy FCF yield of 6.1%. Its balance sheet is solid, with minimal debt. However, the key question for a value investor is the durability of its competitive advantage. Applying the GoodMoat framework's Moat Identification section, Paycom likely scores points for high switching costs (its HCM software is mission-critical and deeply integrated into client payroll and HR operations) and potentially for its founder-led execution. Yet, with a revenue growth rate of 10.2% YoY, it may not demonstrate the accelerating user metrics or network effects typical of the strongest software moats. The Decision Framework requires a Moat Score of at least 5 to proceed; without a full assessment, this is the critical unknown. On valuation, the current P/E of 14.9x and price of $119.82 sit far below the GoodMoat target of $272.90, implying a margin of safety exceeding 50%, which falls into the 'Deeply Undervalued' band (>40%). This creates a compelling tension: a high-quality, profitable business at a deeply discounted price, but one where the long-term durability of its moat warrants careful investigation. For a value investor, this combination makes Paycom a company very much worth investigating further to resolve the moat question. Analysis based on data as of 2024-05-15.
Market Cap$7.06B
Current Price$125.50
P/E Ratio15.58
Forward P/E—
PEG Ratio7.90
EPS$8.08
Book Value$30.77
P/B Ratio4.08
PAYC Financial Charts
FCF vs CAPEX
FCFCAPEX
Forward estimates use 20.8% FCF growth (CAGR)
Cash vs Debt
Net Cash: 280M
Revenue
738M
FY19
841M
FY20
1.1B
FY21
1.4B
FY22
1.7B
FY23
1.9B
FY24
2.1B
FY25
Net Income
181M
FY19
143M
FY20
196M
FY21
281M
FY22
341M
FY23
502M
FY24
453M
FY25
PAYC 52-Week Range
$113.59
$263.94
50-Day MA: $124.37200-Day MA: $172.94
Did you know?
Earnings per share grew at a 16.6% CAGR.
Paycom Software Inc (PAYC) Financial Summary
Paycom Software Inc (PAYC) is a Technology company in the Software - Application industry, listed on NYSE. The stock currently trades at $125.50 with a market capitalization of $7.06B.
Key valuation metrics include a P/E ratio of 15.58, price-to-book ratio of 4.08, and EPS of $8.08. The company reports a profit margin of 22.1% and return on equity of 26.2%.
PAYC Key Financial Metrics
| Metric | Value |
|---|---|
| Market Cap | $7.06B |
| P/E Ratio | 15.58 |
| EPS | $8.08 |
| P/B Ratio | 4.08 |
| P/S Ratio | 3.44 |
| EV/EBITDA | 8.49 |
| Dividend Yield | 1.20% |
| Profit Margin | 22.1% |
| Return on Equity | 26.2% |
| Debt/Equity | 0.05 |
PAYC Revenue & Earnings History
| Year | Revenue | Net Income |
|---|---|---|
| FY19 | $737.67M | $180.58M |
| FY20 | $841.43M | $143.45M |
| FY21 | $1.06B | $195.96M |
| FY22 | $1.38B | $281.40M |
| FY23 | $1.69B | $340.80M |
| FY24 | $1.88B | $502.00M |
| FY25 | $2.05B | $453.40M |
Paycom Software Inc (PAYC) Valuation
Based on GoodMoat's DCF model, Paycom Software Inc has a fair value estimate of $272.90. At the current price of $125.50, the stock appears 54.0% undervalued relative to our intrinsic value estimate.
PAYC Quality Indicators
Paycom Software Inc maintains a profit margin of 22.1% and an operating margin of 27.6%. Return on equity stands at 26.2%. The current ratio is 1.09. Debt-to-equity ratio is 0.05.
About Paycom Software Inc
For over 25 years, Paycom Software, Inc. has simplified business and employees’ lives through easy-to-use HR and payroll technology to empower transparency through direct access to their data. From onboarding and benefits enrollment to talent management and more, Paycom’s employee-first technology leverages full-solution automation to streamline processes, drive efficiencies and give employees power over their own HR information, all in a single app. Paycom’s single database combines all HR and payroll data in one place, providing a seamless and accurate experience without the errors and inefficiencies associated with integrating multiple systems. Recognized globally for its technology and workplace culture, Paycom serves businesses of all sizes in the U.S. and internationally.
PAYC Free Cash Flow
Paycom Software Inc generated $408.10M in trailing twelve-month free cash flow, representing an FCF yield of 5.78%. This strong FCF yield suggests the company generates substantial cash relative to its market value.
PAYC Shares Outstanding
Paycom Software Inc has 0.06 billion shares outstanding at a share price of $125.50, giving it a market capitalization of $7.06B.