PAYCOM SOFTWARE INC (PAYC)
US70432V1026 - Common Stock
Taking everything into account, PAYC scores 7 out of 10 in our fundamental rating. PAYC was compared to 80 industry peers in the Professional Services industry. Both the health and profitability get an excellent rating, making PAYC a very profitable company, without any liquidiy or solvency issues. PAYC is valued quite expensive, but it does show an excellent growth. This makes PAYC very considerable 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.
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
PAYC has a better Return On Assets (13.46%) than 89.61% of its industry peers.
PAYC's Return On Equity of 32.10% is amongst the best of the industry. PAYC outperforms 81.82% of its industry peers.
With an excellent Return On Invested Capital value of 23.34%, PAYC belongs to the best of the industry, outperforming 88.31% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for PAYC is in line with the industry average of 18.16%.
The 3 year average ROIC (17.49%) for PAYC is below the current ROIC(23.34%), indicating increased profibility in the last year.
| 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's Profit Margin of 25.78% is amongst the best of the industry. PAYC outperforms 94.81% 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 96.10% of its industry peers.
In the last couple of years the Operating Margin of PAYC has declined.
Looking at the Gross Margin, with a value of 82.15%, PAYC belongs to the top of the industry, outperforming 90.91% of the companies in the same industry.
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
PAYC has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
The number of shares outstanding for PAYC has been reduced compared to 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 5.45 indicates that PAYC is not in any danger for bankruptcy at the moment.
PAYC has a Altman-Z score of 5.45. This is amongst the best in the industry. PAYC outperforms 84.42% of its industry peers.
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 | 5.45 |
ROIC/WACC2.5
WACC9.35%
2.3 Liquidity
PAYC has a Current 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.
With a Current ratio value of 1.19, PAYC perfoms like the industry average, outperforming 40.26% 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.
PAYC's Quick ratio of 1.19 is in line compared to the rest of the industry. PAYC outperforms 41.56% 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 | 1.19 | ||
| 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%.
Measured over the past years, PAYC shows a very strong growth in Earnings Per Share. The EPS has been growing by 23.85% on average per year.
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
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.
Based on estimates for the next years, PAYC will show a quite strong growth in Revenue. The Revenue will grow by 9.40% on average per year.
EPS Next Y3.65%
EPS Next 2Y6.99%
EPS Next 3Y8.49%
EPS Next 5Y13.62%
Revenue Next Year11.19%
Revenue Next 2Y10.89%
Revenue Next 3Y10.81%
Revenue Next 5Y9.4%
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.
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
With a Price/Earnings ratio of 26.53, PAYC can be considered very expensive at the moment.
The rest of the industry has a similar Price/Earnings ratio as PAYC.
When comparing the Price/Earnings ratio of PAYC to the average of the S&P500 Index (27.73), we can say PAYC is valued inline with the index average.
A Price/Forward Earnings ratio of 23.27 indicates a rather expensive valuation of PAYC.
The rest of the industry has a similar Price/Forward Earnings ratio as PAYC.
The average S&P500 Price/Forward Earnings ratio is at 22.83. PAYC is around the same levels.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 26.53 | ||
| Fwd PE | 23.27 |
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 | 39.14 | ||
| EV/EBITDA | 15.93 |
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.
PAYC has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)7.28
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.
PAYC's Dividend Yield is a higher than the industry average which is at 1.84.
Compared to an average S&P500 Dividend Yield of 2.34, PAYC's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.72% |
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
18.10% of the earnings are spent on dividend by PAYC. This is a low number and sustainable payout ratio.
DP18.1%
EPS Next 2Y6.99%
EPS Next 3Y8.49%
PAYCOM SOFTWARE INC
NYSE:PAYC (12/20/2024, 8:04:00 PM)
After market: 207.5 +0.27 (+0.13%)207.23
+0.24 (+0.12%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)
Earnings (Next)
Inst Owners82.2%
Inst Owner Change2.1%
Ins Owners5.63%
Ins Owner Change-2.86%
Market Cap11.95B
Analysts68.89
Price Target205.78 (-0.7%)
Short Float %3.76%
Short Ratio3.09
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.72% |
Dividend Growth(5Y)N/A
DP18.1%
Div Incr Years1
Div Non Decr Years1
Ex-Date
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)9.63%
PT rev (3m)9.72%
EPS NQ rev (1m)0%
EPS NQ rev (3m)2.85%
EPS NY rev (1m)0.01%
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 | 26.53 | ||
| Fwd PE | 23.27 | ||
| P/S | 6.55 | ||
| P/FCF | 39.14 | ||
| P/OCF | 23.52 | ||
| P/B | 8.16 | ||
| P/tB | 8.75 | ||
| EV/EBITDA | 15.93 |
EPS(TTM)7.81
EY3.77%
EPS(NY)8.91
Fwd EY4.3%
FCF(TTM)5.29
FCFY2.55%
OCF(TTM)8.81
OCFY4.25%
SpS31.63
BVpS25.4
TBVpS23.68
PEG (NY)7.28
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 | 5.45 |
F-Score7
WACC9.35%
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 2Y10.89%
Revenue Next 3Y10.81%
Revenue Next 5Y9.4%
EBIT growth 1Y31.56%
EBIT growth 3Y34.35%
EBIT growth 5Y21.04%
EBIT Next Year29.09%
EBIT Next 3Y16.41%
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%