PAYCOM SOFTWARE INC (PAYC) Stock Fundamental Analysis
NYSE:PAYC - New York Stock Exchange, Inc. - US70432V1026 - Common Stock - Currency: USD
Taking everything into account, PAYC scores 7 out of 10 in our fundamental rating. PAYC was compared to 82 industry peers in the Professional Services industry. PAYC scores excellent points on both the profitability and health parts. This is a solid base for a good stock. PAYC is valied quite expensively at the moment, while it does show a decent growth rate. These ratings could make PAYC a good candidate for quality investing.
1. Profitability
1.1 Basic Checks
PAYC had positive earnings in the past year.
In the past year PAYC had a positive cash flow from operations.
PAYC had positive earnings in each of the past 5 years.
Each year in the past 5 years PAYC had a positive operating cash flow.
1.2 Ratios
PAYC has a Return On Assets of 8.62%. This is in the better half of the industry: PAYC outperforms 78.05% of its industry peers.
PAYC has a Return On Equity of 22.96%. This is in the better half of the industry: PAYC outperforms 74.39% of its industry peers.
With an excellent Return On Invested Capital value of 19.08%, PAYC belongs to the best of the industry, outperforming 90.24% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for PAYC is significantly above the industry average of 12.27%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.62% | ||
| ROE | 22.96% | ||
| ROIC | 19.08% |
ROA(3y)7.97%
ROA(5y)7.1%
ROE(3y)27.27%
ROE(5y)25.12%
ROIC(3y)21.04%
ROIC(5y)18.84%
1.3 Margins
With an excellent Profit Margin value of 20.60%, PAYC belongs to the best of the industry, outperforming 92.68% of the companies in the same industry.
In the last couple of years the Profit Margin of PAYC has grown nicely.
PAYC has a better Operating Margin (27.88%) than 92.68% of its industry peers.
In the last couple of years the Operating Margin of PAYC has grown nicely.
PAYC has a better Gross Margin (82.20%) than 92.68% of its industry peers.
In the last couple of years the Gross Margin of PAYC has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 27.88% | ||
| PM (TTM) | 20.6% | ||
| GM | 82.2% |
OM growth 3Y11.92%
OM growth 5Y1.9%
PM growth 3Y12.81%
PM growth 5Y1.73%
GM growth 3Y-0.97%
GM growth 5Y-0.69%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), PAYC is creating value.
Compared to 1 year ago, PAYC has less shares outstanding
The number of shares outstanding for PAYC has been reduced compared to 5 years ago.
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.
2.2 Solvency
PAYC has an Altman-Z score of 4.25. This indicates that PAYC is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of PAYC (4.25) is better than 71.95% of its industry peers.
PAYC has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0 | ||
| Altman-Z | 4.25 |
ROIC/WACC2.12
WACC8.99%
2.3 Liquidity
PAYC has a Current Ratio of 1.20. This is a normal value and indicates that PAYC is financially healthy and should not expect problems in meeting its short term obligations.
PAYC has a Current ratio (1.20) which is in line with its industry peers.
A Quick Ratio of 1.20 indicates that PAYC should not have too much problems paying its short term obligations.
PAYC has a worse Quick ratio (1.20) than 60.98% of its industry peers.
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.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.2 | ||
| Quick Ratio | 1.2 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 6.32% over the past year.
Measured over the past years, PAYC shows a quite strong growth in Earnings Per Share. The EPS has been growing by 18.56% on average per year.
Looking at the last year, PAYC shows a quite strong growth in Revenue. The Revenue has grown by 9.87% in the last year.
PAYC shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 20.62% yearly.
EPS 1Y (TTM)6.32%
EPS 3Y22.42%
EPS 5Y18.56%
EPS Q2Q%8.11%
Revenue 1Y (TTM)9.87%
Revenue growth 3Y21.29%
Revenue growth 5Y20.62%
Sales Q2Q%6.13%
3.2 Future
Based on estimates for the next years, PAYC will show a quite strong growth in Earnings Per Share. The EPS will grow by 12.40% on average per year.
Based on estimates for the next years, PAYC will show a small growth in Revenue. The Revenue will grow by 7.06% on average per year.
EPS Next Y11.57%
EPS Next 2Y11.18%
EPS Next 3Y12.55%
EPS Next 5Y12.4%
Revenue Next Year8.6%
Revenue Next 2Y8.91%
Revenue Next 3Y9.56%
Revenue Next 5Y7.06%
3.3 Evolution
Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 26.18, which means the current valuation is very expensive for PAYC.
The rest of the industry has a similar Price/Earnings ratio as PAYC.
PAYC's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 27.30.
The Price/Forward Earnings ratio is 21.72, which indicates a rather expensive current valuation of PAYC.
PAYC's Price/Forward Earnings is on the same level as the industry average.
When comparing the Price/Forward Earnings ratio of PAYC to the average of the S&P500 Index (21.76), we can say PAYC is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.18 | ||
| Fwd PE | 21.72 |
4.2 Price Multiples
PAYC's Enterprise Value to EBITDA is on the same level as the industry average.
PAYC's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 32.42 | ||
| EV/EBITDA | 17.95 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
PAYC has an outstanding profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as PAYC's earnings are expected to grow with 12.55% in the coming years.
PEG (NY)2.26
PEG (5Y)1.41
EPS Next 2Y11.18%
EPS Next 3Y12.55%
5. Dividend
5.1 Amount
PAYC has a yearly dividend return of 0.64%, which is pretty low.
PAYC's Dividend Yield is a higher than the industry average which is at 2.06.
Compared to an average S&P500 Dividend Yield of 2.37, PAYC's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.64% |
5.2 History
PAYC has been paying a dividend for less than 5 years, so it still needs to build a track record.
Dividend Growth(5Y)N/A
Div Incr Years1
Div Non Decr Years1
5.3 Sustainability
21.48% of the earnings are spent on dividend by PAYC. This is a low number and sustainable payout ratio.
DP21.48%
EPS Next 2Y11.18%
EPS Next 3Y12.55%
220.2
-9.16 (-3.99%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)
Earnings (Next)
Inst Owners92%
Inst Owner Change-0.02%
Ins Owners5.18%
Ins Owner Change0.5%
Market Cap12.34B
Analysts69.6
Price Target250.31 (13.67%)
Short Float %4.35%
Short Ratio3.62
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.64% |
Yearly Dividend1.51
Dividend Growth(5Y)N/A
DP21.48%
Div Incr Years1
Div Non Decr Years1
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)11.34%
Min EPS beat(2)7.08%
Max EPS beat(2)15.6%
EPS beat(4)3
Avg EPS beat(4)5.95%
Min EPS beat(4)-0.71%
Max EPS beat(4)15.6%
EPS beat(8)6
Avg EPS beat(8)5.16%
EPS beat(12)10
Avg EPS beat(12)6.12%
EPS beat(16)13
Avg EPS beat(16)5.86%
Revenue beat(2)1
Avg Revenue beat(2)-0.26%
Min Revenue beat(2)-1.22%
Max Revenue beat(2)0.69%
Revenue beat(4)1
Avg Revenue beat(4)-0.78%
Min Revenue beat(4)-1.72%
Max Revenue beat(4)0.69%
Revenue beat(8)2
Avg Revenue beat(8)-0.97%
Revenue beat(12)4
Avg Revenue beat(12)-0.7%
Revenue beat(16)8
Avg Revenue beat(16)-0.21%
PT rev (1m)9.21%
PT rev (3m)7.79%
EPS NQ rev (1m)-0.07%
EPS NQ rev (3m)0.56%
EPS NY rev (1m)0.36%
EPS NY rev (3m)3.15%
Revenue NQ rev (1m)-0.01%
Revenue NQ rev (3m)-0.07%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.24%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.18 | ||
| Fwd PE | 21.72 | ||
| P/S | 6.45 | ||
| P/FCF | 32.42 | ||
| P/OCF | 21.73 | ||
| P/B | 7.18 | ||
| P/tB | 7.61 | ||
| EV/EBITDA | 17.95 |
EPS(TTM)8.41
EY3.82%
EPS(NY)10.14
Fwd EY4.6%
FCF(TTM)6.79
FCFY3.08%
OCF(TTM)10.14
OCFY4.6%
SpS34.16
BVpS30.65
TBVpS28.92
PEG (NY)2.26
PEG (5Y)1.41
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.62% | ||
| ROE | 22.96% | ||
| ROCE | 25.53% | ||
| ROIC | 19.08% | ||
| ROICexc | 25.41% | ||
| ROICexgc | 27.09% | ||
| OM | 27.88% | ||
| PM (TTM) | 20.6% | ||
| GM | 82.2% | ||
| FCFM | 19.88% |
ROA(3y)7.97%
ROA(5y)7.1%
ROE(3y)27.27%
ROE(5y)25.12%
ROIC(3y)21.04%
ROIC(5y)18.84%
ROICexc(3y)26.79%
ROICexc(5y)23.85%
ROICexgc(3y)29.01%
ROICexgc(5y)25.99%
ROCE(3y)28.15%
ROCE(5y)25.21%
ROICexcg growth 3Y12.94%
ROICexcg growth 5Y1.1%
ROICexc growth 3Y15.14%
ROICexc growth 5Y1.63%
OM growth 3Y11.92%
OM growth 5Y1.9%
PM growth 3Y12.81%
PM growth 5Y1.73%
GM growth 3Y-0.97%
GM growth 5Y-0.69%
F-Score6
Asset Turnover0.42
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0 | ||
| Debt/EBITDA | 0 | ||
| Cap/Depr | 122.14% | ||
| Cap/Sales | 9.79% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 82.65% | ||
| Profit Quality | 96.52% | ||
| Current Ratio | 1.2 | ||
| Quick Ratio | 1.2 | ||
| Altman-Z | 4.25 |
F-Score6
WACC8.99%
ROIC/WACC2.12
Cap/Depr(3y)151.85%
Cap/Depr(5y)163.91%
Cap/Sales(3y)10.68%
Cap/Sales(5y)11.04%
Profit Quality(3y)77.58%
Profit Quality(5y)84.82%
High Growth Momentum
Growth
EPS 1Y (TTM)6.32%
EPS 3Y22.42%
EPS 5Y18.56%
EPS Q2Q%8.11%
EPS Next Y11.57%
EPS Next 2Y11.18%
EPS Next 3Y12.55%
EPS Next 5Y12.4%
Revenue 1Y (TTM)9.87%
Revenue growth 3Y21.29%
Revenue growth 5Y20.62%
Sales Q2Q%6.13%
Revenue Next Year8.6%
Revenue Next 2Y8.91%
Revenue Next 3Y9.56%
Revenue Next 5Y7.06%
EBIT growth 1Y-7.48%
EBIT growth 3Y35.74%
EBIT growth 5Y22.9%
EBIT Next Year44.32%
EBIT Next 3Y21.91%
EBIT Next 5Y15.57%
FCF growth 1Y51.53%
FCF growth 3Y20.33%
FCF growth 5Y20.7%
OCF growth 1Y44.1%
OCF growth 3Y18.68%
OCF growth 5Y18.94%