PAYCOM SOFTWARE INC (PAYC) Stock Fundamental Analysis
NYSE:PAYC - New York Stock Exchange, Inc. - US70432V1026 - Common Stock - Currency: USD
PAYC gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 83 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 quite expensive at the moment. It does show a decent growth rate. These ratings could make PAYC a good candidate for quality investing.
1. Profitability
1.1 Basic Checks
In the past year PAYC was profitable.
In the past year PAYC had a positive cash flow from operations.
In the past 5 years PAYC has always been profitable.
Each year in the past 5 years PAYC had a positive operating cash flow.
1.2 Ratios
The Return On Assets of PAYC (8.57%) is better than 75.90% of its industry peers.
The Return On Equity of PAYC (31.85%) is better than 80.72% of its industry peers.
Looking at the Return On Invested Capital, with a value of 24.28%, PAYC belongs to the top of the industry, outperforming 92.77% 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 13.57%.
The last Return On Invested Capital (24.28%) for PAYC is above the 3 year average (21.04%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.57% | ||
| ROE | 31.85% | ||
| ROIC | 24.28% |
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
PAYC has a better Profit Margin (26.66%) than 93.98% of its industry peers.
In the last couple of years the Profit Margin of PAYC has grown nicely.
PAYC has a Operating Margin of 33.68%. This is amongst the best in the industry. PAYC outperforms 96.39% of its industry peers.
In the last couple of years the Operating Margin of PAYC has grown nicely.
PAYC's Gross Margin of 82.23% is amongst the best of the industry. PAYC outperforms 91.57% of its industry peers.
PAYC's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 33.68% | ||
| PM (TTM) | 26.66% | ||
| GM | 82.23% |
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
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
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 2.97 indicates that PAYC is not a great score, but indicates only limited risk for bankruptcy at the moment.
The Altman-Z score of PAYC (2.97) is comparable to the rest of the 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 | 2.97 |
ROIC/WACC2.7
WACC8.98%
2.3 Liquidity
A Current Ratio of 1.10 indicates that PAYC should not have too much problems paying its short term obligations.
The Current ratio of PAYC (1.10) is worse than 61.45% of its industry peers.
PAYC has a Quick Ratio of 1.10. 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 Quick ratio of 1.10 is on the low side compared to the rest of the industry. PAYC is outperformed by 61.45% 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 | 1.1 | ||
| Quick Ratio | 1.1 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 5.40% 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.
PAYC shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 11.19%.
Measured over the past years, PAYC shows a very strong growth in Revenue. The Revenue has been growing by 20.62% on average per year.
EPS 1Y (TTM)5.4%
EPS 3Y22.42%
EPS 5Y18.56%
EPS Q2Q%20.21%
Revenue 1Y (TTM)11.19%
Revenue growth 3Y21.29%
Revenue growth 5Y20.62%
Sales Q2Q%13.62%
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 10.16% yearly.
PAYC is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 8.20% yearly.
EPS Next Y8.17%
EPS Next 2Y9.95%
EPS Next 3Y11.16%
EPS Next 5Y10.16%
Revenue Next Year8.33%
Revenue Next 2Y9.03%
Revenue Next 3Y9.72%
Revenue Next 5Y8.2%
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.
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 26.45, the valuation of PAYC can be described as expensive.
PAYC's Price/Earnings ratio is in line with the industry average.
PAYC is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 28.29, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 24.46 indicates a rather expensive valuation of PAYC.
PAYC's Price/Forward Earnings is on the same level as the industry average.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.08, PAYC is valued at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.45 | ||
| Fwd PE | 24.46 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as PAYC.
PAYC's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 37.28 | ||
| EV/EBITDA | 15.57 |
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)3.24
PEG (5Y)1.43
EPS Next 2Y9.95%
EPS Next 3Y11.16%
5. Dividend
5.1 Amount
PAYC has a yearly dividend return of 0.69%, which is pretty low.
PAYC's Dividend Yield is a higher than the industry average which is at 2.24.
Compared to an average S&P500 Dividend Yield of 2.57, PAYC's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.69% |
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 16.89% of its income as dividend. This is a sustainable payout ratio.
DP16.89%
EPS Next 2Y9.95%
EPS Next 3Y11.16%
216.91
+1.38 (+0.64%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)
Earnings (Next)
Inst Owners87.3%
Inst Owner Change0%
Ins Owners5.12%
Ins Owner Change-0.52%
Market Cap12.55B
Analysts70
Price Target232.21 (7.05%)
Short Float %4.14%
Short Ratio3.31
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.69% |
Yearly Dividend1.51
Dividend Growth(5Y)N/A
DP16.89%
Div Incr Years1
Div Non Decr Years1
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)8.71%
Min EPS beat(2)1.82%
Max EPS beat(2)15.6%
EPS beat(4)3
Avg EPS beat(4)5.06%
Min EPS beat(4)-0.71%
Max EPS beat(4)15.6%
EPS beat(8)6
Avg EPS beat(8)4.58%
EPS beat(12)10
Avg EPS beat(12)6.07%
EPS beat(16)13
Avg EPS beat(16)5.53%
Revenue beat(2)1
Avg Revenue beat(2)-0.09%
Min Revenue beat(2)-0.87%
Max Revenue beat(2)0.69%
Revenue beat(4)1
Avg Revenue beat(4)-0.77%
Min Revenue beat(4)-1.72%
Max Revenue beat(4)0.69%
Revenue beat(8)2
Avg Revenue beat(8)-0.86%
Revenue beat(12)5
Avg Revenue beat(12)-0.51%
Revenue beat(16)8
Avg Revenue beat(16)-0.24%
PT rev (1m)1%
PT rev (3m)4.11%
EPS NQ rev (1m)-0.34%
EPS NQ rev (3m)-5.85%
EPS NY rev (1m)0.06%
EPS NY rev (3m)-0.41%
Revenue NQ rev (1m)-0.33%
Revenue NQ rev (3m)-4.71%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-1.81%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.45 | ||
| Fwd PE | 24.46 | ||
| P/S | 6.66 | ||
| P/FCF | 37.28 | ||
| P/OCF | 23.5 | ||
| P/B | 7.96 | ||
| P/tB | 8.49 | ||
| EV/EBITDA | 15.57 |
EPS(TTM)8.2
EY3.78%
EPS(NY)8.87
Fwd EY4.09%
FCF(TTM)5.82
FCFY2.68%
OCF(TTM)9.23
OCFY4.25%
SpS32.55
BVpS27.24
TBVpS25.55
PEG (NY)3.24
PEG (5Y)1.43
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.57% | ||
| ROE | 31.85% | ||
| ROCE | 32.48% | ||
| ROIC | 24.28% | ||
| ROICexc | 30.57% | ||
| ROICexgc | 32.63% | ||
| OM | 33.68% | ||
| PM (TTM) | 26.66% | ||
| GM | 82.23% | ||
| FCFM | 17.87% |
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 Turnover0.32
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0 | ||
| Debt/EBITDA | 0 | ||
| Cap/Depr | 135.23% | ||
| Cap/Sales | 10.48% | ||
| Interest Coverage | 317.16 | ||
| Cash Conversion | 68.43% | ||
| Profit Quality | 67.05% | ||
| Current Ratio | 1.1 | ||
| Quick Ratio | 1.1 | ||
| Altman-Z | 2.97 |
F-Score6
WACC8.98%
ROIC/WACC2.7
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)5.4%
EPS 3Y22.42%
EPS 5Y18.56%
EPS Q2Q%20.21%
EPS Next Y8.17%
EPS Next 2Y9.95%
EPS Next 3Y11.16%
EPS Next 5Y10.16%
Revenue 1Y (TTM)11.19%
Revenue growth 3Y21.29%
Revenue growth 5Y20.62%
Sales Q2Q%13.62%
Revenue Next Year8.33%
Revenue Next 2Y9.03%
Revenue Next 3Y9.72%
Revenue Next 5Y8.2%
EBIT growth 1Y40.55%
EBIT growth 3Y35.74%
EBIT growth 5Y22.9%
EBIT Next Year41.43%
EBIT Next 3Y21.31%
EBIT Next 5Y17.51%
FCF growth 1Y16.79%
FCF growth 3Y20.33%
FCF growth 5Y20.7%
OCF growth 1Y10.07%
OCF growth 3Y18.68%
OCF growth 5Y18.94%