Paycom (PAYC) AI Stock Analysis

• Market Cap: $10.83B
• Dividend Yield: 0.81%
• Average Volume (3M): 653.39K
• Price to Earnings (P/E): 25.3
• Beta (1Y): 0.44
• Revenue Growth: 10.21%
• EPS Growth: -10.56%
• Country: US
• Employees: 7,306
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 2.06
• Shares Outstanding: 57,876,797
• 10 Day Avg. Volume: 520,522
• 30 Day Avg. Volume: 653,394
• 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: 1.17
• Enterprise Value/Revenue: 6.44
• Enterprise Value/Gross Profit: 7.81
• Enterprise Value/Ebitda: 17.28
• 1Y Price Target: $251.17
• Price Target Upside: 35.88% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 15

• Rating: 81 Outperform
• Price Target: $231.00 ▲(24.97% Upside)

Paycom's strong financial performance and positive earnings call are the primary drivers of its high score. The company's robust revenue growth, profitability, and strategic innovations like the IWant product contribute significantly to its outlook. However, the stock's technical indicators suggest a bearish trend, and its high valuation may pose risks. Despite these concerns, the company's strategic focus and financial health position it well for future growth.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong market demand and effective business strategies, supporting long-term financial stability and expansion.

Innovation and Product Development

The introduction of innovative products like IWant enhances user engagement and satisfaction, strengthening Paycom's competitive position in the HCM market.

Financial Position

A strong cash position with no debt provides financial flexibility for strategic investments and resilience against economic fluctuations.

Negative Factors

Decline in Interest Revenue

Declining interest revenue could impact overall profitability, especially if interest rates continue to fall, reducing income from client funds.

Increased Capital Expenditures

Higher capital expenditures may pressure free cash flow in the short term, potentially affecting cash reserves and investment capacity.

Equity Ratio Concerns

A relatively low equity ratio indicates potential risk if liabilities increase significantly, which could affect financial stability.

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 exhibits a strong financial profile 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	1.96B	1.88B	1.69B	1.38B	1.06B	841.43M
Gross Profit	1.62B	1.55B	1.42B	1.16B	893.64M	717.89M
EBITDA	730.55M	798.30M	588.20M	484.80M	323.18M	239.33M
Net Income	415.78M	502.00M	340.79M	281.39M	195.96M	143.45M
Balance Sheet
Total Assets	4.03B	5.86B	4.20B	3.90B	3.22B	2.61B
Cash, Cash Equivalents and Short-Term Investments	532.20M	402.00M	294.00M	400.73M	277.98M	151.71M
Total Debt	81.20M	83.40M	75.90M	29.00M	29.16M	30.89M
Total Liabilities	2.23B	4.28B	2.89B	2.72B	2.32B	1.95B
Stockholders Equity	1.80B	1.58B	1.30B	1.18B	893.71M	655.64M
Cash Flow
Free Cash Flow	359.20M	341.00M	288.21M	228.31M	193.17M	133.10M
Operating Cash Flow	558.17M	533.90M	485.04M	365.10M	319.36M	227.21M
Investing Cash Flow	-659.08M	-22.20M	-196.71M	-23.29M	-257.67M	-117.88M
Financing Cash Flow	-860.75M	1.11B	-274.66M	254.59M	165.72M	-165.91M

Paycom Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 184.85
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• 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 184.85 is below the 20-day moving average (MA) of 198.31, below the 50-day MA of 210.17, and below the 200-day MA of 222.06, indicating a bearish trend. The MACD of -6.19 indicates Positive momentum. The RSI at 28.07 is Positive, neither overbought nor oversold. The STOCH value of 8.33 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	―	$10.83B	25.31	25.76%	0.81%	10.21%	-10.56%
PCTY	―	$7.66B	35.06	20.04%	―	13.74%	10.99%
DAY	―	$11.00B	―	-5.71%	―	11.73%	-376.77%
CVLT	―	$6.19B	79.08	32.87%	―	22.02%	-55.25%
Sector *	―	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
PRCH	―	$1.57B	32.44	―	―	-7.41%	―
KC	―	$3.80B	―	-31.02%	―	20.42%	-9.39%

Paycom Corporate Events

Felicia Williams Retires from Paycom Board

On September 16, 2025, Felicia Williams announced her retirement from Paycom‘s Board of Directors, effective September 30, 2025, leading to a reduction in board size from eight to seven members. Her departure is amicable, with no disagreements with the company, and Frederick C. Peters II will succeed her as the chairperson of the audit committee.

The most recent analyst rating on (PAYC) stock is a Buy with a $285.00 price target. To see the full list of analyst forecasts on Paycom stock, see the PAYC Stock Forecast page.

Paycom Announces Executive Team Changes on August 18

On August 18, 2025, Paycom announced significant changes in its executive team, including the promotion of Shane Hadlock to Chief Client Officer and Chief Technology Officer, and Rachael Gannon to Chief Automation Officer. Brad Smith will transition to Senior Technical Strategist after resigning as Chief Information Officer on October 31, 2025. These changes aim to enhance Paycom’s technical capabilities and product strategy, focusing on client ROI and innovation. Hadlock and Gannon’s extensive experience within the company positions them to drive further growth and automation, while Smith’s new role will continue to leverage his expertise in innovative solutions.

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.

Paycom Software’s Earnings Call Highlights Robust Growth

The recent earnings call from Paycom Software reveals a robust financial performance, marked by significant revenue growth and increased profitability. The launch of the innovative IWant product is anticipated to enhance client engagement and retention. Despite some concerns regarding the decline in interest revenue, the positive aspects, including raised guidance and industry recognitions, largely overshadow these issues.

Paycom Software Reports Strong Q2 2025 Performance

Paycom Software, Inc. is a leading provider of cloud-based human capital management software, offering automated HR and payroll technology solutions. In its second quarter of 2025 earnings report, Paycom announced a robust performance with revenues reaching $484 million, marking an 11% increase year-over-year. The company also reported a GAAP net income of $89 million, which is 19% of total revenues, and a non-GAAP net income of $117 million. Adjusted EBITDA was reported at $198 million, representing 41% of total revenues. Key highlights from the report include a significant increase in recurring and other revenues by 12.2% compared to the previous year, and a strong cash position with $532.2 million in cash and cash equivalents. The company also made strategic investments by repurchasing shares and paying dividends. Paycom’s innovative AI engine, IWant, is expected to further strengthen its market position. Looking forward, Paycom has raised its growth and margin targets for 2025, with a projected total revenue range of $2.045 billion to $2.055 billion, indicating continued confidence in its growth trajectory.

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.