PAYCOM SOFTWARE INC (PAYC)
US70432V1026 - Common Stock
PAYC gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 81 industry peers in the Professional Services industry. PAYC gets an excellent profitability rating and is at the same time showing great financial health properties. PAYC shows excellent growth, but is valued quite expensive already. These ratings would make PAYC suitable for growth and 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.
PAYC had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
PAYC has a better Return On Assets (13.46%) than 89.61% of its industry peers.
With an excellent Return On Equity value of 32.10%, PAYC belongs to the best of the industry, outperforming 83.12% of the companies in the same industry.
With an excellent Return On Invested Capital value of 23.34%, PAYC belongs to the best of the industry, outperforming 89.61% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for PAYC is significantly above the industry average of 12.35%.
The last Return On Invested Capital (23.34%) for PAYC is above the 3 year average (17.49%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 13.46% | ||
| ROE | 32.1% | ||
| ROIC | 23.34% |
ROA(3y)7.14%
ROA(5y)6.84%
ROE(3y)23.96%
ROE(5y)25.61%
ROIC(3y)17.49%
ROIC(5y)17.96%
1.3 Margins
Looking at the Profit Margin, with a value of 25.78%, PAYC belongs to the top of the industry, outperforming 94.81% of the companies in the same industry.
In the last couple of years the Profit Margin of PAYC has declined.
PAYC has a Operating Margin of 32.49%. This is amongst the best in the industry. PAYC outperforms 96.10% of its industry peers.
In the last couple of years the Operating Margin of PAYC has declined.
PAYC has a Gross Margin of 82.15%. This is amongst the best in the industry. PAYC outperforms 89.61% of its industry peers.
PAYC's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 32.49% | ||
| PM (TTM) | 25.78% | ||
| GM | 82.15% |
OM growth 3Y6.41%
OM growth 5Y-2.77%
PM growth 3Y5.67%
PM growth 5Y-3.6%
GM growth 3Y-0.64%
GM growth 5Y-0.07%
2. Health
2.1 Basic Checks
PAYC has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it 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.
PAYC has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.
2.2 Solvency
PAYC has an Altman-Z score of 5.78. This indicates that PAYC is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 5.78, PAYC belongs to the top of the industry, outperforming 84.42% of the companies in the same industry.
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.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0 | ||
| Altman-Z | 5.78 |
ROIC/WACC2.58
WACC9.05%
2.3 Liquidity
A Current Ratio of 1.19 indicates that PAYC should not have too much problems paying its short term obligations.
With a Current ratio value of 1.19, PAYC is not doing good in the industry: 62.34% of the companies in the same industry are doing better.
PAYC has a Quick Ratio of 1.19. This is a normal value and indicates that PAYC is financially healthy and should not expect problems in meeting its short term obligations.
The Quick ratio of PAYC (1.19) is worse than 61.04% of its industry peers.
The current and quick ratio evaluation for PAYC is rather negative, while it does have 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 | 1.19 | ||
| Quick Ratio | 1.19 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 3.03% over the past year.
The Earnings Per Share has been growing by 23.85% on average over the past years. This is a very strong growth
PAYC shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 11.92%.
The Revenue has been growing by 24.50% on average over the past years. This is a very strong growth!
EPS 1Y (TTM)3.03%
EPS 3Y30.63%
EPS 5Y23.85%
EPS Q2Q%-5.65%
Revenue 1Y (TTM)11.92%
Revenue growth 3Y26.26%
Revenue growth 5Y24.5%
Sales Q2Q%11.23%
3.2 Future
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.
EPS Next Y3.63%
EPS Next 2Y6.91%
EPS Next 3Y8.37%
EPS Next 5Y12.1%
Revenue Next Year11.19%
Revenue Next 2Y10.86%
Revenue Next 3Y10.77%
Revenue Next 5Y11.79%
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.
Although the future Revenue growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 29.07, the valuation of PAYC can be described as expensive.
PAYC's Price/Earnings is on the same level as the industry average.
PAYC is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 28.96, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 25.53, which means the current valuation is very expensive for PAYC.
PAYC's Price/Forward Earnings is on the same level as the industry average.
The average S&P500 Price/Forward Earnings ratio is at 23.82. PAYC is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.07 | ||
| Fwd PE | 25.53 |
4.2 Price Multiples
PAYC's Enterprise Value to EBITDA ratio is in line with the industry average.
PAYC's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 42.88 | ||
| EV/EBITDA | 17.49 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates PAYC does not grow enough to justify the current Price/Earnings ratio.
The excellent profitability rating of PAYC may justify a higher PE ratio.
PEG (NY)8
PEG (5Y)1.22
EPS Next 2Y6.91%
EPS Next 3Y8.37%
5. Dividend
5.1 Amount
With a yearly dividend of 0.67%, PAYC is not a good candidate for dividend investing.
PAYC's Dividend Yield is a higher than the industry average which is at 1.81.
With a Dividend Yield of 0.67, PAYC pays less dividend than the S&P500 average, which is at 2.23.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.67% |
5.2 History
PAYC is new to the dividend game and has less than 3 years of track record.
Dividend Growth(5Y)N/A
Div Incr Years1
Div Non Decr Years1
5.3 Sustainability
PAYC pays out 18.10% of its income as dividend. This is a sustainable payout ratio.
DP18.1%
EPS Next 2Y6.91%
EPS Next 3Y8.37%
PAYCOM SOFTWARE INC
NYSE:PAYC (11/21/2024, 8:04:00 PM)
After market: 227.02 0 (0%)227.02
+7.24 (+3.29%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap13.09B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.67% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
Avg EPS beat(2)
Min EPS beat(2)
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Revenue beat(2)
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Revenue beat(16)
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PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 29.07 | ||
| Fwd PE | 25.53 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)8
PEG (5Y)1.22
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 13.46% | ||
| ROE | 32.1% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 32.49% | ||
| PM (TTM) | 25.78% | ||
| GM | 82.15% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.52
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.19 | ||
| Quick Ratio | 1.19 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
High Growth Momentum
Growth
EPS 1Y (TTM)3.03%
EPS 3Y30.63%
EPS 5Y
EPS Q2Q%
EPS Next Y3.63%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)11.92%
Revenue growth 3Y26.26%
Revenue growth 5Y
Sales Q2Q%
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y