PAYCOM SOFTWARE INC (PAYC) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:PAYC - US70432V1026 - Common Stock
142.19 USD
-5.26 (-3.57%)
142.19 USD
0 (0%)
We assign a fundamental rating of 8 out of 10 to PAYC. PAYC was compared to 87 industry peers in the Professional Services industry. PAYC has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. PAYC has a decent growth rate and is not valued too expensively. With these ratings, PAYC could be worth investigating further for quality investing!.
1. Profitability
1.1 Basic Checks
- PAYC had positive earnings in the past year.
- PAYC had a positive operating cash flow in the past year.
- 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
- The Return On Assets of PAYC (10.67%) is better than 83.91% of its industry peers.
- PAYC has a Return On Equity of 26.51%. This is amongst the best in the industry. PAYC outperforms 81.61% of its industry peers.
- PAYC's Return On Invested Capital of 19.27% is amongst the best of the industry. PAYC outperforms 90.80% of its industry peers.
- The Average Return On Invested Capital over the past 3 years for PAYC is significantly above the industry average of 11.85%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.67% | ||
| ROE | 26.51% | ||
| ROIC | 19.27% |
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 22.64%, PAYC belongs to the best of the industry, outperforming 91.95% of the companies in the same industry.
- PAYC's Profit Margin has improved in the last couple of years.
- PAYC's Operating Margin of 27.91% is amongst the best of the industry. PAYC outperforms 95.40% of its industry peers.
- In the last couple of years the Operating Margin of PAYC has grown nicely.
- PAYC has a Gross Margin of 82.95%. This is amongst the best in the industry. PAYC outperforms 94.25% 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 | 27.91% | ||
| PM (TTM) | 22.64% | ||
| GM | 82.95% |
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
- The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so PAYC is creating value.
- Compared to 1 year ago, PAYC has less shares outstanding
- PAYC has less shares outstanding than it did 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
- An Altman-Z score of 3.67 indicates that PAYC is not in any danger for bankruptcy at the moment.
- PAYC has a Altman-Z score of 3.67. This is in the better half of the industry: PAYC outperforms 68.97% 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 | 3.67 |
ROIC/WACC2.17
WACC8.88%
2.3 Liquidity
- PAYC has a Current Ratio of 1.22. This is a normal value and indicates that PAYC is financially healthy and should not expect problems in meeting its short term obligations.
- PAYC's Current ratio of 1.22 is in line compared to the rest of the industry. PAYC outperforms 40.23% of its industry peers.
- A Quick Ratio of 1.22 indicates that PAYC should not have too much problems paying its short term obligations.
- PAYC has a Quick ratio (1.22) which is comparable to the rest of the 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.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.22 | ||
| Quick Ratio | 1.22 |
3. Growth
3.1 Past
- PAYC shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 16.77%, which is quite good.
- The Earnings Per Share has been growing by 18.56% on average over the past years. This is quite good.
- PAYC shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 9.72%.
- The Revenue has been growing by 20.62% on average over the past years. This is a very strong growth!
EPS 1Y (TTM)16.77%
EPS 3Y22.42%
EPS 5Y18.56%
EPS Q2Q%16.17%
Revenue 1Y (TTM)9.72%
Revenue growth 3Y21.29%
Revenue growth 5Y20.62%
Sales Q2Q%9.15%
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 12.97% on average per year.
- The Revenue is expected to grow by 7.12% on average over the next years.
EPS Next Y15.29%
EPS Next 2Y11.85%
EPS Next 3Y11.9%
EPS Next 5Y12.97%
Revenue Next Year9.59%
Revenue Next 2Y9.15%
Revenue Next 3Y9.22%
Revenue Next 5Y7.12%
3.3 Evolution
- The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
- Based on the Price/Earnings ratio of 15.59, the valuation of PAYC can be described as correct.
- Compared to the rest of the industry, the Price/Earnings ratio of PAYC indicates a somewhat cheap valuation: PAYC is cheaper than 72.41% of the companies listed in the same industry.
- When comparing the Price/Earnings ratio of PAYC to the average of the S&P500 Index (27.25), we can say PAYC is valued slightly cheaper.
- The Price/Forward Earnings ratio is 13.86, which indicates a correct valuation of PAYC.
- 73.56% of the companies in the same industry are more expensive than PAYC, based on the Price/Forward Earnings ratio.
- Compared to an average S&P500 Price/Forward Earnings ratio of 25.98, PAYC is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 15.59 | ||
| Fwd PE | 13.86 |
4.2 Price Multiples
- PAYC's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. PAYC is cheaper than 75.86% of the companies in the same industry.
- Compared to the rest of the industry, the Price/Free Cash Flow ratio of PAYC indicates a somewhat cheap valuation: PAYC is cheaper than 68.97% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 20.02 | ||
| EV/EBITDA | 10.65 |
4.3 Compensation for Growth
- PAYC's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
- PAYC has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)1.02
PEG (5Y)0.84
EPS Next 2Y11.85%
EPS Next 3Y11.9%
5. Dividend
5.1 Amount
- With a yearly dividend of 0.98%, PAYC is not a good candidate for dividend investing.
- In the last 3 months the price of PAYC has falen by -24.00%. A price decline artificially increases the dividend yield. It may be a sign investors do not expect the dividend to last.
- Compared to an average industry Dividend Yield of 1.44, PAYC pays a bit more dividend than its industry peers.
- With a Dividend Yield of 0.98, PAYC pays less dividend than the S&P500 average, which is at 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.98% |
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
- PAYC pays out 18.80% of its income as dividend. This is a sustainable payout ratio.
DP18.8%
EPS Next 2Y11.85%
EPS Next 3Y11.9%
PAYCOM SOFTWARE INC / PAYC FAQ
What is the fundamental rating for PAYC stock?
ChartMill assigns a fundamental rating of 8 / 10 to PAYC.
Can you provide the valuation status for PAYCOM SOFTWARE INC?
ChartMill assigns a valuation rating of 6 / 10 to PAYCOM SOFTWARE INC (PAYC). This can be considered as Fairly Valued.
How profitable is PAYCOM SOFTWARE INC (PAYC) stock?
PAYCOM SOFTWARE INC (PAYC) has a profitability rating of 9 / 10.
What are the PE and PB ratios of PAYCOM SOFTWARE INC (PAYC) stock?
The Price/Earnings (PE) ratio for PAYCOM SOFTWARE INC (PAYC) is 15.59 and the Price/Book (PB) ratio is 4.57.
How sustainable is the dividend of PAYCOM SOFTWARE INC (PAYC) stock?
The dividend rating of PAYCOM SOFTWARE INC (PAYC) is 3 / 10 and the dividend payout ratio is 18.8%.