Paycom (PAYC) AI Stock Analysis

• Market Cap: $12.46B
• Dividend Yield: 0.7%
• Average Volume (3M): 581.00K
• Price to Earnings (P/E): 29.1
• Beta (1Y): 0.59
• Revenue Growth: 10.21%
• EPS Growth: -10.56%
• Country: US
• Employees: 7,306
• Sector: Technology
• Sector Strength: 96
• Industry: Software - Application
• EPS (TTM): 2.06
• Shares Outstanding: 57,876,797
• 10 Day Avg. Volume: 773,606
• 30 Day Avg. Volume: 580,998
• PEG Ratio: 0.45
• Price to Book (P/B): 7.31
• Price to Sales (P/S): 6.12
• P/FCF Ratio: 33.78
• Enterprise Value/Market Cap: 1.01
• Enterprise Value/Revenue: 6.60
• Enterprise Value/Gross Profit: 8.21
• Enterprise Value/Ebitda: 18.10
• 1Y Price Target: $239.82
• Price Target Upside: 11.44% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 14

• Rating: 76 Outperform
• Price Target: $250.00 ▲(16.17% Upside)

Paycom's strong financial performance and positive earnings call sentiment are the primary drivers of its overall score. The company's robust revenue growth, profitability, and strategic product innovations position it well for future success. However, technical analysis indicates bearish momentum, and the high valuation suggests a premium price, which slightly tempers the overall score.

Positive Factors

Earnings Performance

Paycom reported better than expected 2Q results, with revenue of $484mn versus Consensus $472mn, citing strong new logo additions and increasing platform adoption as main factors driving growth.

Financial Guidance

Management raised FY revenue guidance by $20mn to $2,050mn at the midpoint, signaling incremental confidence in 2H.

Negative Factors

Free Cash Flow Concerns

FCF estimates being revised lower as well as uncertainty regarding the outlook for capex spend & relative valuation vs. comps being an overhang for shares.

Macro Uncertainty

Risks to this year include 2H seasonality, macro uncertainty, and the potential for rate cuts, all of which could create headwinds for topline growth.

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 a subscription-based model for its software solutions. The company charges clients a fee based on the number of employees they manage through the system, creating a scalable revenue stream that grows as clients expand their workforce. Key revenue streams include software licensing fees, payroll processing fees, and additional charges for various HR services such as talent acquisition and employee management tools. Significant partnerships with various organizations and ongoing investments in product development also contribute to Paycom's earnings by enhancing its service offerings and maintaining a competitive edge in the HCM market.

Paycom Financial Statement Overview

Summary

Paycom demonstrates strong financial performance with impressive revenue and profit growth, efficient cost management, and robust cash flow generation. The company's low leverage and high return on equity further reinforce its financial stability. While the equity ratio is relatively low, the company's consistent performance and cash flow strength mitigate potential risks.

Income Statement

Paycom has demonstrated strong revenue growth with a consistent upward trajectory from $737.67 million in 2019 to $1.88 billion in 2024. The gross profit margin remains robust at 82.2% in 2024, indicating efficient cost management. The net profit margin improved significantly from 19.5% in 2019 to 26.7% in 2024, showcasing enhanced profitability. EBIT and EBITDA margins have also shown positive trends, reinforcing operational efficiency.

Balance Sheet

The balance sheet reflects a solid financial position with a low debt-to-equity ratio of 0.05 in 2024, indicating minimal leverage. Return on equity has improved to 31.9% in 2024, highlighting effective use of shareholders' funds. The equity ratio stands at 26.9%, suggesting a stable capital structure. However, the relatively low equity ratio indicates potential risk if liabilities increase significantly.

Cash Flow

Paycom's cash flow is strong, with a free cash flow growth rate of 18.3% from 2023 to 2024, reflecting healthy cash generation. The operating cash flow to net income ratio is 1.06 in 2024, indicating efficient cash conversion from profits. The free cash flow to net income ratio is 0.68, showing substantial cash available after capital expenditures.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.91B	1.88B	1.69B	1.38B	1.06B	841.43M
Gross Profit	1.54B	1.55B	1.42B	1.16B	893.64M	717.89M
EBITDA	697.27M	798.30M	503.37M	424.08M	284.29M	239.33M
Net Income	394.25M	502.00M	340.79M	281.39M	195.96M	143.45M
Balance Sheet
Total Assets	4.57B	5.86B	4.20B	3.90B	3.22B	2.61B
Cash, Cash Equivalents and Short-Term Investments	520.80M	402.00M	294.02M	400.73M	277.98M	151.71M
Total Debt	81.50M	83.40M	75.95M	29.00M	29.16M	30.89M
Total Liabilities	2.86B	4.28B	2.89B	2.72B	2.32B	1.95B
Stockholders Equity	1.72B	1.58B	1.30B	1.18B	893.71M	655.64M
Cash Flow
Free Cash Flow	384.89M	341.00M	288.21M	228.31M	193.17M	133.10M
Operating Cash Flow	567.76M	533.90M	485.04M	365.10M	319.36M	227.21M
Investing Cash Flow	-444.38M	-22.20M	-196.71M	-23.29M	-257.67M	-117.88M
Financing Cash Flow	-720.09M	1.11B	-274.66M	254.59M	165.72M	-165.91M

Paycom Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 215.21
• 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 215.21 is below the 20-day moving average (MA) of 229.74, below the 50-day MA of 235.79, and below the 200-day MA of 222.73, indicating a bearish trend. The MACD of -3.06 indicates Positive momentum. The RSI at 35.97 is Neutral, neither overbought nor oversold. The STOCH value of 14.60 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
PCTY	76 Outperform	$9.50B	42.87	20.04%	―	13.74%	10.99%
PAYC	76 Outperform	$12.46B	29.11	25.76%	0.70%	10.21%	-10.56%
MANH	75 Outperform	$12.86B	59.29	85.16%	―	6.13%	9.17%
BILL	74 Outperform	$4.02B	482.28	0.97%	―	14.52%	―
PYCR	74 Outperform	$4.09B	―	-1.66%	―	15.72%	74.59%
DUOL	68 Neutral	$14.80B	134.20	13.44%	―	39.51%	68.53%
Sector *	61 Neutral	$36.31B	7.01	-9.37%	2.01%	7.73%	-9.28%

Paycom Corporate Events

Paycom Declares Quarterly Cash Dividend Announcement

On August 4, 2025, Paycom Software, Inc. announced that its Board of Directors declared a regular quarterly cash dividend of $0.375 per share of common stock. This dividend will be paid on September 8, 2025, to stockholders of record as of August 25, 2025. This announcement reflects Paycom’s ongoing commitment to returning value to its shareholders and may enhance its attractiveness to investors.

The most recent analyst rating on (PAYC) stock is a Hold with a $175.00 price target. To see the full list of analyst forecasts on Paycom stock, see the PAYC Stock Forecast page.