Paycom (PAYC) AI Stock Analysis

• Market Cap: $6.76B
• Dividend Yield: 0.94%
• Average Volume (3M): 2.28M
• Price to Earnings (P/E): 19.6
• Beta (1Y): 0.85
• Revenue Growth: 9.72%
• EPS Growth: -2.69%
• Country: US
• Employees: 5,770
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 2.45
• Shares Outstanding: 54,275,097
• 10 Day Avg. Volume: 1,715,777
• 30 Day Avg. Volume: 2,276,813
• PEG Ratio: -2.19
• Price to Book (P/B): 5.14
• Price to Sales (P/S): 4.33
• P/FCF Ratio: 21.79
• Enterprise Value/Market Cap: 0.98
• Enterprise Value/Revenue: 3.23
• Enterprise Value/Gross Profit: 4.00
• Enterprise Value/Ebitda: 8.29
• 1Y Price Target: $150.36
• Price Target Upside: 20.78% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 17
• EPS Forecast (FY): 10.32
• Revenue Forecast (FY): $2.19B

• Rating: 71 Outperform
• Price Target: $140.00 ▲(12.46% Upside)
• Action: Reiterated Date: 03/13/26
• Date: Action: Reiterated 03/13/26

The score is primarily supported by strong underlying financial quality (high margins, cash generation, and historically conservative balance sheet) and a constructive earnings outlook that maintains strong profitability despite slower growth. Offsetting factors are weak technical trend/momentum and a guidance-driven growth deceleration, with corporate actions slightly mixed due to increased revolver usage despite continued capital returns.

Positive Factors

High margins and strong free cash flow

Sustained high cash generation and improving operating dollars provide durable funding for R&D, client success, and capital returns. Strong FCF supports reinvestment in automation and buybacks/dividends while buffering execution risk and preserving optionality through business cycles.

Conservative balance sheet with capital return optionality

A historically low leverage profile and sizable remaining buyback plus a newly declared dividend show disciplined capital allocation. This conservatism gives management flexibility to fund growth, weather shocks, or return capital without stressing operations or long-term investment plans.

Product innovation, retention, and upmarket traction

Durable differentiation from automation/AI products plus strong retention creates high-quality recurring revenue and expands enterprise opportunity. Upmarket wins increase average contract value and deepen enterprise stickiness, supporting sustainable revenue per client over time.

Negative Factors

Guidance implies clear growth deceleration

A materially slower growth trajectory versus 2025 reduces revenue upside and increases the onus on margin expansion and buybacks to drive shareholder returns. Persistent deceleration could pressure long-term investment funding and requires sustained product and sales execution to reverse.

Heavy reliance on new-logo sales execution

Dependence on ramping sales capacity and winning new enterprise logos elevates execution risk. Sales retraining and leadership transitions can slow conversion and lengthen sales cycles, making revenue realization and upmarket strategy outcomes uncertain over the next several quarters.

Substantial revolver draw increases leverage reliance

Large draws on an expanded revolving facility shift the firm away from its recent zero-debt profile and increase liquidity reliance on bank credit. Higher leverage can constrain flexibility, raise financing costs if markets tighten, and modestly heighten financial risk over the medium term.

Paycom Business Overview & Revenue Model

Company Description

Paycom Software, Inc. provides cloud-based human capital management (HCM) solution delivered as software-as-a-service for small to mid-sized companies in the United States. It offers functionality and data analytics that businesses need to manage the employment life cycle from recruitment to retirement. The company's HCM solution provides a suite of applications in the areas of talent acquisition, including applicant tracking, candidate tracker, background checks, on-boarding, e-verify, and tax credit services; and time and labor management, such as time and attendance, scheduling/schedule exchange, time-off requests, labor allocation, labor management reports/push reporting, and geofencing/geotracking, and Microfence, a proprietary Bluetooth. Its HCM solution also offers payroll applications comprising better employee transaction interface, payroll and tax management, Paycom pay, expense management, mileage tracker/fixed and variable rates, garnishment management, and GL concierge applications; and talent management applications that include employee self-service, compensation budgeting, performance management, position management, and Paycom learning and content subscriptions, as well as my analytics, which offer employment predictor reporting. In addition, its HCM solution provides manager on-the-go that gives supervisors and managers the ability to perform a variety of tasks, such as approving time-off requests and expense reimbursements; direct data exchange; ask here, a tool for direct line of communication to ask work-related questions; document and checklist; government and compliance; benefits administration/benefits to carrier; COBRA administration; personnel action and performance discussion forms; surveys; and affordable care act applications, as well as Clue, which securely collect, track, and manage the vaccination and testing data of the workforce. Paycom Software, Inc. was founded in 1998 and is headquartered in Oklahoma City, Oklahoma.

How the Company Makes Money

Paycom generates revenue primarily through subscription fees for its cloud-based HCM software. Its revenue model includes both initial implementation fees and ongoing monthly subscription fees, which provide a predictable revenue stream. Key revenue streams consist of payroll processing, time and attendance solutions, talent management, and employee benefits administration. Additionally, Paycom offers various add-on services that enhance its core offerings, creating additional revenue opportunities. The company benefits from strong customer retention rates and recurring revenue, as clients typically remain on its platform for several years. Strategic partnerships with organizations that provide complementary services also contribute to its earnings, enabling Paycom to expand its market reach and enhance its service offerings.

Paycom Financial Statement Overview

Summary

High-margin software model with strong profitability history and rising operating/FCF dollars, supported by a conservative capital structure. The key offset is the clear growth deceleration and signs of margin compression/visibility gaps in the most recent year, which raise near-term execution risk.

Income Statement

PAYC shows strong profitability with consistently high gross margins (~82–85%) and solid net margins (~17–27%). Revenue has grown meaningfully over the last several years, but growth decelerated sharply in 2025 (about 2.5% vs. ~11% in 2024 and higher rates earlier). Profitability also softened in 2025, with net income down versus 2024 and EBITDA margin compressing (to ~34% from ~42%), which is the key near-term weakness.

Balance Sheet

The balance sheet looks conservative: total debt remains low relative to equity (roughly 5% debt-to-equity in 2023–2024) and equity has steadily increased over time. This provides flexibility and lowers financial risk. The main drawback is that some provided leverage/return metrics for 2025 appear unavailable (shown as 0), limiting visibility into the most recent year’s return profile; however, prior years show strong returns on equity (~22–32%).

Cash Flow

Cash generation is solid and improving in dollars, with operating cash flow rising from ~$227M (2020) to ~$679M (2025) and free cash flow reaching ~$408M in 2025. Free cash flow growth remains positive in 2025, but cash conversion is only moderate: free cash flow runs at ~59–64% of net income across the period, indicating some drag from working capital, capex, or other cash items. Some 2025 coverage data is not available (shown as 0), which reduces confidence in the latest cash-flow quality read-through.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	2.05B	1.88B	1.69B	1.38B	1.06B
Gross Profit	1.61B	1.55B	1.42B	1.16B	893.64M
EBITDA	799.10M	798.30M	588.20M	484.80M	323.18M
Net Income	453.40M	502.00M	340.79M	281.39M	195.96M
Balance Sheet
Total Assets	7.60B	5.86B	4.20B	3.90B	3.22B
Cash, Cash Equivalents and Short-Term Investments	370.00M	402.00M	294.00M	400.73M	277.98M
Total Debt	152.20M	83.40M	75.90M	29.00M	29.16M
Total Liabilities	5.87B	4.28B	2.89B	2.72B	2.32B
Stockholders Equity	1.73B	1.58B	1.30B	1.18B	893.71M
Cash Flow
Free Cash Flow	408.00M	341.00M	288.21M	228.31M	193.17M
Operating Cash Flow	678.90M	533.90M	485.04M	365.10M	319.36M
Investing Cash Flow	-611.20M	-22.20M	-196.71M	-23.29M	-257.67M
Financing Cash Flow	1.02B	1.11B	-274.66M	254.59M	165.72M

Paycom Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 124.49
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PAYC, the sentiment is Negative. The current price of 124.49 is below the 20-day moving average (MA) of 127.01, below the 50-day MA of 134.88, and below the 200-day MA of 187.73, indicating a bearish trend. The MACD of -1.74 indicates Positive momentum. The RSI at 42.92 is Neutral, neither overbought nor oversold. The STOCH value of 13.90 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PAYC.

Paycom Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PAYC	71 Outperform	$6.76B	19.61	26.06%	0.94%	9.72%	-2.69%
PCTY	70 Outperform	$5.91B	41.43	20.52%	―	13.30%	2.80%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
KC	60 Neutral	$4.63B	-1,593.62	-16.43%	―	24.26%	55.58%
CVLT	57 Neutral	$3.54B	77.74	31.15%	―	22.02%	-55.25%
PRCH	56 Neutral	$766.40M	61.80	-13.21%	―	-2.13%	―

Paycom Corporate Events

Paycom Expands Revolving Credit Facility to Boost Liquidity

On March 12, 2026, Paycom Payroll, LLC increased the aggregate commitments under its existing credit agreement by $461.6 million, expanding its senior secured revolving credit facility to $1.46 billion. The core terms of the original July 29, 2022 credit agreement remain unchanged under this supplement, preserving the existing framework with JPMorgan Chase Bank, N.A. and other lenders.

As of March 12, 2026, Paycom had drawn approximately $675 million under the enlarged revolving facility, signaling substantial use of the available liquidity for its corporate purposes. The upsized facility strengthens the company’s access to capital, potentially enhancing its financial flexibility and supporting future operational or strategic initiatives without altering previously agreed financing terms.

The most recent analyst rating on (PAYC) stock is a Buy with a $150.00 price target. To see the full list of analyst forecasts on Paycom stock, see the PAYC Stock Forecast page.

Paycom Expands Share Repurchase Authorization with Added Funds

On March 5, 2026, Paycom Software, Inc.’s board authorized an additional $200 million for repurchases of the company’s common stock under its existing stock buyback plan, partially replenishing the program after Paycom completed roughly $1.45 billion in aggregate share repurchases since the plan’s launch in July 2024. The company said repurchases may occur via open market or privately negotiated transactions, including accelerated buybacks, with timing and volume determined at the board committee’s discretion based on market and corporate factors, and noted that the plan is set to expire on Aug. 15, 2026 and can be suspended or discontinued at any time.

The most recent analyst rating on (PAYC) stock is a Hold with a $143.00 price target. To see the full list of analyst forecasts on Paycom stock, see the PAYC Stock Forecast page.

Paycom Elevates Shane Hadlock to President and CCO

On Feb. 18, 2026, Paycom’s board appointed longtime executive Shane Hadlock as president and chief client officer, making him the company’s sole principal operating officer and increasing his base salary to $700,000. Chief Operating Officer Randy Peck will report to Hadlock, while founder Chad Richison remains CEO and chairman, formalizing a leadership structure that elevates client-focused and operational oversight at the senior level.

Hadlock, a 51-year-old technology veteran with nearly 14 years at Paycom and prior leadership experience at Hertz, has held key roles spanning IT, information security and client services, aligning him with the firm’s automation and innovation agenda. Also on Feb. 18, 2026, the board approved amended and restated bylaws that redefine the president’s duties to be directed by either the board or CEO and broaden the definition of “Principal Competitor,” changes that enhance governance flexibility and sharpen how Paycom evaluates rivals in its advance notice provisions.

On Feb. 19, 2026, Paycom issued a press release announcing Hadlock’s promotion and highlighting his role in driving strategic operations and cross-functional alignment. The move underscores the company’s emphasis on scaling its full-solution automation strategy and delivering additional return on investment to clients as it pursues long-term growth.

The most recent analyst rating on (PAYC) stock is a Buy with a $139.00 price target. To see the full list of analyst forecasts on Paycom stock, see the PAYC Stock Forecast page.

Paycom Board Declares Regular Quarterly Cash Dividend

On February 10, 2026, Paycom announced that its board declared a regular quarterly cash dividend of $0.375 per share of common stock. The dividend is scheduled to be paid on March 23, 2026, to shareholders of record as of March 9, 2026, underscoring the company’s continued return of capital to investors and signaling confidence in its financial position and cash generation.

The most recent analyst rating on (PAYC) stock is a Buy with a $150.00 price target. To see the full list of analyst forecasts on Paycom stock, see the PAYC Stock Forecast page.