NYSE:PAYC: a strong growth stock preparing for the next leg up?.

Groth investors are looking for stocks showing high revenue and EPS growth. We will have a look here to see if PAYCOM SOFTWARE INC (NYSE:PAYC) is suited for growth investing, while it is forming a base and may be ready to breakout. Investors should of course do their own research, but we spotted PAYCOM SOFTWARE INC showing up in our growth with base formation screen, so it may be worth spending some more time on it.

Growth Examination for NYSE:PAYC

ChartMill assigns a Growth Rating to every stock. This score ranges from 0 to 10 and evaluates the different growth aspects like EPS and Revenue, both in the past as in the future. NYSE:PAYC scores a 8 out of 10:

• PAYC shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 11.72%, which is quite good.
• The Earnings Per Share has been growing by 23.85% on average over the past years. This is a very strong growth
• The Revenue has grown by 14.18% in the past year. This is quite good.
• The Revenue has been growing by 24.50% on average over the past years. This is a very strong growth!
• PAYC is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 12.10% yearly.
• The Revenue is expected to grow by 11.79% on average over the next years. This is quite good.

How do we evaluate the Health for NYSE:PAYC?

A critical element of ChartMill's stock evaluation is the Health Rating, which spans from 0 to 10. This rating considers multiple health factors, including liquidity and solvency, both in absolute terms and relative to industry peers. NYSE:PAYC has received a 8 out of 10:

• An Altman-Z score of 3.43 indicates that PAYC is not in any danger for bankruptcy at the moment.
• There is no outstanding debt for PAYC. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
• PAYC does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

Exploring NYSE:PAYC's Profitability

ChartMill assigns a proprietary Profitability Rating to each stock. The score is computed by evaluating various profitability ratios and margins and ranges from 0 to 10. NYSE:PAYC was assigned a score of 8 for profitability:

• PAYC has a Return On Assets of 10.95%. This is amongst the best in the industry. PAYC outperforms 86.25% of its industry peers.
• The Return On Equity of PAYC (33.10%) is better than 85.00% of its industry peers.
• PAYC has a Return On Invested Capital of 23.63%. This is amongst the best in the industry. PAYC outperforms 90.00% of its industry peers.
• Measured over the past 3 years, the Average Return On Invested Capital for PAYC is above the industry average of 13.09%.
• The 3 year average ROIC (17.49%) for PAYC is below the current ROIC(23.63%), indicating increased profibility in the last year.
• PAYC has a better Profit Margin (26.55%) than 95.00% of its industry peers.
• PAYC's Operating Margin of 32.87% is amongst the best of the industry. PAYC outperforms 96.25% of its industry peers.
• With an excellent Gross Margin value of 82.79%, PAYC belongs to the best of the industry, outperforming 91.25% of the companies in the same industry.

How do we evaluate the setup for NYSE:PAYC?

Alongside the Technical Rating, ChartMill assigns a Setup Rating to evaluate the consolidation level of a stock. This rating, ranging from 0 to 10, is updated daily and considers various short-term technical indicators. The current setup rating for NYSE:PAYC is 8:

PAYC has a bad technical rating, but it does show a decent setup pattern. Prices have been consolidating lately and the volatility has been reduced. There is a resistance zone just above the current price starting at 159.51. Right above this resistance zone may be a good entry point. There is a support zone below the current price at 158.53, a Stop Loss order could be placed below this zone.

More Strong Growth stocks can be found in our Strong Growth screener.

Our latest full fundamental report of PAYC contains the most current fundamental analsysis.

Check the latest full technical report of PAYC for a complete technical analysis.

Disclaimer

This article should in no way be interpreted as advice. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.