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 82 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 is quite expensive at the moment. It does show a decent growth rate. This makes PAYC very considerable 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.
In the past 5 years PAYC always reported a positive cash flow from operatings.
1.2 Ratios
The Return On Assets of PAYC (8.57%) is better than 75.95% of its industry peers.
With an excellent Return On Equity value of 31.86%, PAYC belongs to the best of the industry, outperforming 81.01% of the companies in the same industry.
PAYC's Return On Invested Capital of 24.28% is amongst the best of the industry. PAYC outperforms 89.87% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for PAYC is significantly above the industry average of 13.65%.
The 3 year average ROIC (21.04%) for PAYC is below the current ROIC(24.28%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.57% | ||
| ROE | 31.86% | ||
| 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's Profit Margin of 26.66% is amongst the best of the industry. PAYC outperforms 93.67% of its industry peers.
In the last couple of years the Profit Margin of PAYC has grown nicely.
PAYC has a better Operating Margin (33.68%) than 96.20% of its industry peers.
PAYC's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 82.24%, PAYC belongs to the top of the industry, outperforming 91.14% of the companies in the same industry.
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 | 82.24% |
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.
PAYC has less shares outstanding than it did 1 year ago.
Compared to 5 years ago, PAYC has less shares outstanding
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
PAYC has an Altman-Z score of 2.94. This is not the best score and indicates that PAYC is in the grey zone with still only limited risk for bankruptcy at the moment.
PAYC has a Altman-Z score of 2.94. This is comparable to the rest of the industry: PAYC outperforms 51.90% 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 | 2.94 |
ROIC/WACC2.68
WACC9.06%
2.3 Liquidity
A Current Ratio of 1.10 indicates that PAYC should not have too much problems paying its short term obligations.
PAYC's Current ratio of 1.10 is on the low side compared to the rest of the industry. PAYC is outperformed by 64.56% 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 has a Quick ratio of 1.10. This is in the lower half of the industry: PAYC underperforms 64.56% 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
PAYC shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 5.40%.
PAYC shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 18.56% yearly.
PAYC shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 11.19%.
PAYC shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 20.62% yearly.
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
The Earnings Per Share is expected to grow by 13.39% on average over the next years. This is quite good.
Based on estimates for the next years, PAYC will show a small growth in Revenue. The Revenue will grow by 7.58% on average per year.
EPS Next Y8.1%
EPS Next 2Y9.82%
EPS Next 3Y11.17%
EPS Next 5Y13.39%
Revenue Next Year8.44%
Revenue Next 2Y9.1%
Revenue Next 3Y9.88%
Revenue Next 5Y7.58%
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
PAYC is valuated quite expensively with a Price/Earnings ratio of 25.98.
Compared to the rest of the industry, the Price/Earnings ratio of PAYC is on the same level as its industry peers.
The average S&P500 Price/Earnings ratio is at 29.63. PAYC is around the same levels.
PAYC is valuated rather expensively with a Price/Forward Earnings ratio of 24.04.
PAYC's Price/Forward Earnings is on the same level as the industry average.
When comparing the Price/Forward Earnings ratio of PAYC to the average of the S&P500 Index (22.68), we can say PAYC is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.98 | ||
| Fwd PE | 24.04 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as PAYC.
The rest of the industry has a similar Price/Free Cash Flow ratio as PAYC.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 36.5 | ||
| EV/EBITDA | 15.33 |
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)3.21
PEG (5Y)1.4
EPS Next 2Y9.82%
EPS Next 3Y11.17%
5. Dividend
5.1 Amount
PAYC has a yearly dividend return of 0.69%, which is pretty low.
Compared to an average industry Dividend Yield of 1.93, PAYC pays a bit more dividend than its industry peers.
With a Dividend Yield of 0.69, PAYC pays less dividend than the S&P500 average, which is at 2.29.
| 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 2Y9.82%
EPS Next 3Y11.17%
213.06
-1.34 (-0.62%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)
Earnings (Next)
Inst Owners82.2%
Inst Owner Change-0.37%
Ins Owners5.63%
Ins Owner Change-2.32%
Market Cap12.29B
Analysts69.23
Price Target229.91 (7.91%)
Short Float %4.33%
Short Ratio3.76
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)0.61%
PT rev (3m)19.55%
EPS NQ rev (1m)0.09%
EPS NQ rev (3m)0.09%
EPS NY rev (1m)0.01%
EPS NY rev (3m)0.02%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.98 | ||
| Fwd PE | 24.04 | ||
| P/S | 6.52 | ||
| P/FCF | 36.5 | ||
| P/OCF | 23.01 | ||
| P/B | 7.8 | ||
| P/tB | 8.31 | ||
| EV/EBITDA | 15.33 |
EPS(TTM)8.2
EY3.85%
EPS(NY)8.86
Fwd EY4.16%
FCF(TTM)5.84
FCFY2.74%
OCF(TTM)9.26
OCFY4.35%
SpS32.66
BVpS27.33
TBVpS25.63
PEG (NY)3.21
PEG (5Y)1.4
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.57% | ||
| ROE | 31.86% | ||
| ROCE | 32.48% | ||
| ROIC | 24.28% | ||
| ROICexc | 30.57% | ||
| ROICexgc | 32.63% | ||
| OM | 33.68% | ||
| PM (TTM) | 26.66% | ||
| GM | 82.24% | ||
| 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 | 2.94 |
F-Score6
WACC9.06%
ROIC/WACC2.68
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 Y8.1%
EPS Next 2Y9.82%
EPS Next 3Y11.17%
EPS Next 5Y13.39%
Revenue 1Y (TTM)11.19%
Revenue growth 3Y21.29%
Revenue growth 5Y20.62%
Sales Q2Q%13.62%
Revenue Next Year8.44%
Revenue Next 2Y9.1%
Revenue Next 3Y9.88%
Revenue Next 5Y7.58%
EBIT growth 1Y40.55%
EBIT growth 3Y35.74%
EBIT growth 5Y22.9%
EBIT Next Year38.59%
EBIT Next 3Y20.09%
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%