PAYCOM SOFTWARE INC (PAYC) Stock Fundamental Analysis
NYSE:PAYC - New York Stock Exchange, Inc. - US70432V1026 - Common Stock
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 valued quite expensively, but it does show have an excellent growth rating. With these ratings, PAYC could be worth investigating further 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.
Each year in the past 5 years PAYC has been profitable.
In the past 5 years PAYC always reported a positive cash flow from operatings.
1.2 Ratios
With an excellent Return On Assets value of 13.46%, PAYC belongs to the best of the industry, outperforming 89.87% of the companies in the same industry.
With an excellent Return On Equity value of 32.10%, PAYC belongs to the best of the industry, outperforming 82.28% of the companies in the same industry.
PAYC's Return On Invested Capital of 23.34% is amongst the best of the industry. PAYC outperforms 88.61% of its industry peers.
The Average Return On Invested Capital over the past 3 years for PAYC is above the industry average of 13.48%.
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
PAYC has a Profit Margin of 25.78%. This is amongst the best in the industry. PAYC outperforms 94.94% of its industry peers.
PAYC's Profit Margin has declined in the last couple of years.
PAYC has a Operating Margin of 32.49%. This is amongst the best in the industry. PAYC outperforms 96.20% of its industry peers.
PAYC's Operating Margin has declined in the last couple of years.
PAYC has a better Gross Margin (82.15%) than 91.14% 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 | 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
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so PAYC is creating value.
PAYC has less shares outstanding than it did 1 year ago.
PAYC has less shares outstanding than it did 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
An Altman-Z score of 5.48 indicates that PAYC is not in any danger for bankruptcy at the moment.
With an excellent Altman-Z score value of 5.48, PAYC belongs to the best of the industry, outperforming 86.08% of the companies in the same industry.
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 | 5.48 |
ROIC/WACC2.5
WACC9.34%
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 perfoms like the industry average, outperforming 40.51% of the companies in the same industry.
A Quick Ratio of 1.19 indicates that PAYC should not have too much problems paying its short term obligations.
Looking at the Quick ratio, with a value of 1.19, PAYC is in line with its industry, outperforming 41.77% of the companies in the same 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 | 1.19 | ||
| Quick Ratio | 1.19 |
3. Growth
3.1 Past
PAYC shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 3.03%.
PAYC shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 23.85% yearly.
PAYC shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 11.92%.
PAYC shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 24.50% yearly.
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
Based on estimates for the next years, PAYC will show a quite strong growth in Earnings Per Share. The EPS will grow by 13.62% on average per year.
PAYC is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 9.40% yearly.
EPS Next Y3.65%
EPS Next 2Y6.99%
EPS Next 3Y8.49%
EPS Next 5Y13.62%
Revenue Next Year11.19%
Revenue Next 2Y10.76%
Revenue Next 3Y10.62%
Revenue Next 5Y9.4%
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
Based on the Price/Earnings ratio of 26.36, the valuation of PAYC can be described as expensive.
The rest of the industry has a similar Price/Earnings ratio as PAYC.
Compared to an average S&P500 Price/Earnings ratio of 28.29, PAYC is valued at the same level.
With a Price/Forward Earnings ratio of 23.11, PAYC is valued on the expensive side.
PAYC's Price/Forward Earnings is on the same level as the industry average.
The average S&P500 Price/Forward Earnings ratio is at 24.44. PAYC is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.36 | ||
| Fwd PE | 23.11 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of PAYC is on the same level as its industry peers.
PAYC's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 38.88 | ||
| EV/EBITDA | 16.09 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The excellent profitability rating of PAYC may justify a higher PE ratio.
PEG (NY)7.23
PEG (5Y)1.11
EPS Next 2Y6.99%
EPS Next 3Y8.49%
5. Dividend
5.1 Amount
With a yearly dividend of 0.72%, PAYC is not a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 1.82, PAYC pays a bit more dividend than its industry peers.
With a Dividend Yield of 0.72, PAYC pays less dividend than the S&P500 average, which is at 2.28.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.72% |
5.2 History
PAYC does not have a reliable dividend history as it only pays dividend since a couple or years.
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 2Y6.99%
EPS Next 3Y8.49%
PAYCOM SOFTWARE INC
NYSE:PAYC (1/22/2025, 1:59:43 PM)
205.84
-3.42 (-1.63%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)
Earnings (Next)
Inst Owners82.2%
Inst Owner Change-0.58%
Ins Owners5.63%
Ins Owner Change-2.61%
Market Cap11.87B
Analysts68.89
Price Target223.06 (8.37%)
Short Float %4.62%
Short Ratio3.72
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.72% |
Yearly Dividend1.13
Dividend Growth(5Y)N/A
DP18.1%
Div Incr Years1
Div Non Decr Years1
Ex-DateN/A
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)0.55%
Min EPS beat(2)-0.71%
Max EPS beat(2)1.82%
EPS beat(4)3
Avg EPS beat(4)2.73%
Min EPS beat(4)-0.71%
Max EPS beat(4)6.27%
EPS beat(8)6
Avg EPS beat(8)4.38%
EPS beat(12)10
Avg EPS beat(12)4.81%
EPS beat(16)13
Avg EPS beat(16)4.79%
Revenue beat(2)0
Avg Revenue beat(2)-1.29%
Min Revenue beat(2)-1.72%
Max Revenue beat(2)-0.87%
Revenue beat(4)1
Avg Revenue beat(4)-0.73%
Min Revenue beat(4)-1.72%
Max Revenue beat(4)0.84%
Revenue beat(8)1
Avg Revenue beat(8)-1.06%
Revenue beat(12)5
Avg Revenue beat(12)-0.46%
Revenue beat(16)8
Avg Revenue beat(16)-0.19%
PT rev (1m)8.39%
PT rev (3m)18.69%
EPS NQ rev (1m)0%
EPS NQ rev (3m)2.85%
EPS NY rev (1m)0%
EPS NY rev (3m)0.83%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-0.66%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.16%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.36 | ||
| Fwd PE | 23.11 | ||
| P/S | 6.51 | ||
| P/FCF | 38.88 | ||
| P/OCF | 23.37 | ||
| P/B | 8.1 | ||
| P/tB | 8.69 | ||
| EV/EBITDA | 16.09 |
EPS(TTM)7.81
EY3.79%
EPS(NY)8.91
Fwd EY4.33%
FCF(TTM)5.29
FCFY2.57%
OCF(TTM)8.81
OCFY4.28%
SpS31.63
BVpS25.4
TBVpS23.68
PEG (NY)7.23
PEG (5Y)1.11
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 13.46% | ||
| ROE | 32.1% | ||
| ROCE | 32.33% | ||
| ROIC | 23.34% | ||
| ROICexc | 28.38% | ||
| ROICexgc | 30.38% | ||
| OM | 32.49% | ||
| PM (TTM) | 25.78% | ||
| GM | 82.15% | ||
| FCFM | 16.74% |
ROA(3y)7.14%
ROA(5y)6.84%
ROE(3y)23.96%
ROE(5y)25.61%
ROIC(3y)17.49%
ROIC(5y)17.96%
ROICexc(3y)22.48%
ROICexc(5y)22.57%
ROICexgc(3y)24.81%
ROICexgc(5y)24.77%
ROCE(3y)24.22%
ROCE(5y)24.89%
ROICexcg growth 3Y9.51%
ROICexcg growth 5Y-4.13%
ROICexc growth 3Y9.36%
ROICexc growth 5Y-3.21%
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%
F-Score7
Asset Turnover0.52
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0 | ||
| Debt/EBITDA | 0 | ||
| Cap/Depr | 147.83% | ||
| Cap/Sales | 11.11% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 69.61% | ||
| Profit Quality | 64.92% | ||
| Current Ratio | 1.19 | ||
| Quick Ratio | 1.19 | ||
| Altman-Z | 5.48 |
F-Score7
WACC9.34%
ROIC/WACC2.5
Cap/Depr(3y)169.37%
Cap/Depr(5y)180.89%
Cap/Sales(3y)11.18%
Cap/Sales(5y)11.46%
Profit Quality(3y)88.09%
Profit Quality(5y)85.96%
High Growth Momentum
Growth
EPS 1Y (TTM)3.03%
EPS 3Y30.63%
EPS 5Y23.85%
EPS Q2Q%-5.65%
EPS Next Y3.65%
EPS Next 2Y6.99%
EPS Next 3Y8.49%
EPS Next 5Y13.62%
Revenue 1Y (TTM)11.92%
Revenue growth 3Y26.26%
Revenue growth 5Y24.5%
Sales Q2Q%11.23%
Revenue Next Year11.19%
Revenue Next 2Y10.76%
Revenue Next 3Y10.62%
Revenue Next 5Y9.4%
EBIT growth 1Y31.56%
EBIT growth 3Y34.35%
EBIT growth 5Y21.04%
EBIT Next Year29.12%
EBIT Next 3Y16.04%
EBIT Next 5Y15.17%
FCF growth 1Y55.43%
FCF growth 3Y29.37%
FCF growth 5Y18.2%
OCF growth 1Y55.62%
OCF growth 3Y28.76%
OCF growth 5Y21.29%