NYSE:PAYC

Stock Analysis Report

Executive Summary

Paycom Software, Inc. provides cloud-based human capital management (HCM) software service for small to mid-sized companies in the United States.

Rewards

Trading at 7% below its fair value

Earnings are forecast to grow 21.59% per year

Earnings have grown 47.6% per year over the past 5 years

Risk Analysis

Highly volatile share price over past 3 months



Snowflake Analysis

Exceptional growth potential with flawless balance sheet.


Similar Companies

Share Price & News

How has Paycom Software's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: PAYC's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

3.7%

PAYC

2.7%

US Software

2.0%

US Market


1 Year Return

117.4%

PAYC

39.3%

US Software

23.5%

US Market

Return vs Industry: PAYC exceeded the US Software industry which returned 39.8% over the past year.

Return vs Market: PAYC exceeded the US Market which returned 24.7% over the past year.


Shareholder returns

PAYCIndustryMarket
7 Day3.7%2.7%2.0%
30 Day12.4%7.8%4.3%
90 Day43.8%19.7%12.2%
1 Year117.4%117.4%40.5%39.3%26.1%23.5%
3 Year502.2%502.2%144.5%134.7%53.1%43.2%
5 Year995.6%995.6%198.8%177.5%75.5%56.1%

Price Volatility Vs. Market

How volatile is Paycom Software's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Paycom Software undervalued compared to its fair value and its price relative to the market?

3.8%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: PAYC ($286.51) is trading below our estimate of fair value ($307.91)

Significantly Below Fair Value: PAYC is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: PAYC is poor value based on its PE Ratio (99x) compared to the Software industry average (47.3x).

PE vs Market: PAYC is poor value based on its PE Ratio (99x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: PAYC is poor value based on its PEG Ratio (4.6x)


Price to Book Ratio

PB vs Industry: PAYC is overvalued based on its PB Ratio (34.8x) compared to the US Software industry average (5.9x).


Next Steps

Future Growth

How is Paycom Software forecast to perform in the next 1 to 3 years based on estimates from 16 analysts?

21.6%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: PAYC's forecast earnings growth (21.6% per year) is above the savings rate (1.7%).

Earnings vs Market: PAYC's earnings (21.6% per year) are forecast to grow faster than the US market (14.3% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: PAYC's revenue (21.6% per year) is forecast to grow faster than the US market (7.5% per year).

High Growth Revenue: PAYC's revenue (21.6% per year) is forecast to grow faster than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: PAYC's Return on Equity is forecast to be high in 3 years time (36.2%)


Next Steps

Past Performance

How has Paycom Software performed over the past 5 years?

47.6%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: PAYC has high quality earnings.

Growing Profit Margin: PAYC's current net profit margins (24%) are lower than last year (29.1%).


Past Earnings Growth Analysis

Earnings Trend: PAYC's earnings have grown significantly by 47.6% per year over the past 5 years.

Accelerating Growth: PAYC's earnings growth over the past year (7.9%) is below its 5-year average (47.6% per year).

Earnings vs Industry: PAYC earnings growth over the past year (7.9%) underperformed the Software industry 20.8%.


Return on Equity

High ROE: PAYC's Return on Equity (35.1%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Paycom Software's financial position?


Financial Position Analysis

Short Term Liabilities: PAYC's short term assets ($1.0B) exceed its short term liabilities ($918.5M).

Long Term Liabilities: PAYC's short term assets ($1.0B) exceed its long term liabilities ($198.7M).


Debt to Equity History and Analysis

Debt Level: PAYC's debt to equity ratio (7%) is considered satisfactory.

Reducing Debt: PAYC's debt to equity ratio has reduced from 38.5% to 7% over the past 5 years.

Debt Coverage: PAYC's debt is well covered by operating cash flow (651.3%).

Interest Coverage: PAYC's interest payments on its debt are well covered by EBIT (57.1x coverage).


Balance Sheet

Inventory Level: PAYC has a low level of unsold assets or inventory.

Debt Coverage by Assets: PAYC's debt is covered by short term assets (assets are 30.6x debt).


Next Steps

Dividend

What is Paycom Software's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

companyn/amarketbottom25%1.4%markettop25%3.7%industryaverage1.3%forecastin3Years0%

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate PAYC's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate PAYC's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if PAYC's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if PAYC's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of PAYC's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

What is the CEO of Paycom Software's salary, the management and board of directors tenure and is there insider trading?

6.8yrs

Average management tenure


CEO

Chad Richison (49yo)

22yrs

Tenure

US$16,938,845

Compensation

Mr. Chad Richison has served as President, Chief Executive Officer and Founder of Paycom Software, Inc. (“Paycom”) since 1998. He has also served as a Member of Board of Directors at Paycom Software, Inc.  ...


CEO Compensation Analysis

Compensation vs Market: Chad's total compensation ($USD16.94M) is above average for companies of similar size in the US market ($USD10.76M).

Compensation vs Earnings: Chad's compensation has increased by more than 20% in the past year.


Management Age and Tenure

6.8yrs

Average Tenure

52yo

Average Age

Experienced Management: PAYC's management team is seasoned and experienced (6.8 years average tenure).


Board Age and Tenure

3.3yrs

Average Tenure

61yo

Average Age

Experienced Board: PAYC's board of directors are considered experienced (3.3 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Chad Richison (49yo)

    Founder

    • Tenure: 22yrs
    • Compensation: US$16.94m
  • Jon Evans (53yo)

    Chief Operating Officer

    • Tenure: 2.8yrs
    • Compensation: US$1.44m
  • Tiffany McGowen

    Director of Recruiting

    • Kristy Ross

      Head of the San Francisco Office

      • Tenure: 6.8yrs
    • Craig Boelte (56yo)

      CFO, Treasurer & Corporate Secretary

      • Tenure: 13.9yrs
      • Compensation: US$5.06m
    • Jeffrey York (52yo)

      Chief Sales Officer

      • Tenure: 13yrs
      • Compensation: US$5.18m
    • Brad Smith (49yo)

      Chief Information Officer

      • Tenure: 1.8yrs
      • Compensation: US$1.58m
    • James Samford

      Head of Investor Relations

      • Tenure: 1yrs

    Board Members

    • Ric Duques (75yo)

      Independent Director

      • Tenure: 3.2yrs
      • Compensation: US$270.17k
    • Janet Haugen (60yo)

      Independent Director

      • Tenure: 1.9yrs
      • Compensation: US$247.42k
    • Robert Levenson (78yo)

      Independent Director

      • Tenure: 12.5yrs
      • Compensation: US$274.92k
    • Ted Peters (69yo)

      Lead Independent Director

      • Compensation: US$296.42k
    • J.C. Watts (61yo)

      Independent Director

      • Tenure: 3.2yrs
      • Compensation: US$270.42k
    • Jason Clark (49yo)

      Independent Director

      • Tenure: 5.4yrs
      • Compensation: US$274.92k
    • Chad Richison (49yo)

      Founder

      • Tenure: 22yrs
      • Compensation: US$16.94m

    Company Information

    Paycom Software, Inc.'s company bio, employee growth, exchange listings and data sources


    Key Information

    • Name: Paycom Software, Inc.
    • Ticker: PAYC
    • Exchange: NYSE
    • Founded: 1998
    • Industry: Application Software
    • Sector: Software
    • Market Cap: US$17.080b
    • Shares outstanding: 57.66m
    • Website: https://www.paycom.com

    Number of Employees


    Location

    • Paycom Software, Inc.
    • 7501 West Memorial Road
    • Oklahoma City
    • Oklahoma
    • 73142
    • United States

    Listings

    TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
    PAYCNYSE (New York Stock Exchange)YesCommon StockUSUSDApr 2014
    0PYDB (Deutsche Boerse AG)YesCommon StockDEEURApr 2014
    0KGHLSE (London Stock Exchange)YesCommon StockGBUSDApr 2014
    PAYC *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNApr 2014

    Biography

    Paycom Software, Inc. provides cloud-based human capital management (HCM) software service for small to mid-sized companies in the United States. It provides functionality and data analytics that businesses need to manage the employment life cycle from recruitment to retirement. The company’s HCM solution offers a suite of applications in the areas of talent acquisition, including applicant tracking, candidate tracker, background checks, on-boarding, e-verify, and tax credit services; and time and labor management, such as time and attendance, scheduling/schedule exchange, time-off requests, labor allocation, labor management reports/push reporting, and geofencing/geotracking. Its HCM solution also provides payroll applications comprising payroll and tax management, Paycom pay, expense management, garnishment management, mileage tracker/fixed and variable rates, and GL concierge applications; and talent management applications that include employee self-service, compensation budgeting, performance management, executive dashboard, and Paycom learning and course content. In addition, the company’s HCM solution offers HR management applications, which comprise document and task management, government and compliance, benefits administration/benefits to carrier, COBRA administration, personnel action forms, surveys, and affordable care act applications. Paycom Software, Inc. was founded in 1998 and is headquartered in Oklahoma City, Oklahoma. 


    Company Analysis and Financial Data Status

    All financial data provided by Standard & Poor's Capital IQ.
    DataLast Updated (UTC time)
    Company Analysis2020/01/19 00:35
    End of Day Share Price2020/01/17 00:00
    Earnings2019/09/30
    Annual Earnings2018/12/31


    Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.