Paycom Software (PAYC)
NYSE:PAYC
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Paycom
(NYSE:PAYC)
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Rating:74Outperform
Price Target:
$153.00
▲(20.54% Upside)
Action:Reiterated
Date:05/09/26
The score is driven primarily by strong margins and cash generation, tempered by slower growth and materially higher leverage. Valuation is a clear positive with a low P/E and a dividend. Technicals are improving in the short term but still below the long-term trend, while the latest earnings call supports profitability and guidance but highlights leverage and execution risks.
Positive Factors
High, Software‑Style Margins
Sustained, high software‑style margins support durable profitability and operating leverage. Elevated gross and operating margins give Paycom flexibility to invest in product, absorb competitive pricing pressure, and fund R&D or client service without immediate margin erosion.
Negative Factors
Marked Increase in Financial Leverage
A sharp rise in leverage reduces financial flexibility and raises interest and covenant sensitivity. Higher debt levels limit free cash deployment options, amplify downside in a downturn, and make capital returns riskier over a multi‑quarter horizon.
Read all positive and negative factors
Positive Factors
Negative Factors
High, Software‑Style Margins
Sustained, high software‑style margins support durable profitability and operating leverage. Elevated gross and operating margins give Paycom flexibility to invest in product, absorb competitive pricing pressure, and fund R&D or client service without immediate margin erosion.
Read all positive factors
Paycom Key Performance Indicators (KPIs)
Any
Revenue by Type
Breaks down revenue by different service offerings, highlighting which areas are driving growth and where there might be opportunities or challenges.
Breaks down revenue by different service offerings, highlighting which areas are driving growth and where there might be opportunities or challenges.
Data provided by:
The Fly
The FlyPaycom (PAYC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.56B
Dividend Yield0.94%
Average Volume (3M)993.80K
Price to Earnings (P/E)10.0
Beta (1Y)0.87
Revenue Growth9.37%
EPS Growth23.47%
CountryUS
Employees5,770
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)8.68
Shares Outstanding47,631,450
10 Day Avg. Volume1,089,808
30 Day Avg. Volume993,799
Financial Highlights & Ratios
PEG Ratio-2.19
Price to Book (P/B)5.14
Price to Sales (P/S)4.33
P/FCF Ratio21.79
Enterprise Value/Market Cap1.24
Enterprise Value/Revenue3.88
Enterprise Value/Gross Profit4.87
Enterprise Value/Ebitda9.79
Forecast
1Y Price Target
$146.91Price Target Upside15.74% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering15
EPS Forecast (FY)10.49
Revenue Forecast (FY)$2.19B
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 ...
How the Company Makes Money
Paycom primarily makes money by selling subscription access to its cloud-based HCM and payroll software platform and by charging fees associated with delivering payroll and related services. Revenue is generally driven by (1) recurring fees for us...
Paycom Earnings Call Summary
Earnings Call Date:May 06, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 04, 2026
Earnings Call Sentiment Positive
The call conveyed solid operational and financial performance in Q1 with double-digit automation and AI usage gains, margin expansion, and aggressive capital returns via a large buyback and dividend. Management reaffirmed full-year guidance, signaling conservatism for the remainder of the year despite the quarter beat. Key risks highlighted include increased leverage from buybacks funded in part by the credit facility, near-term sales-force ramp timing, and uncertainty on direct AI monetization and CapEx timing. Overall, the positives (revenue and recurring growth, strong margins, product momentum, and shareholder returns) outweigh the negatives, though investors should monitor leverage and execution on sales/bookings cadence for the rest of 2026.Positive Updates
Top-Line Growth
Total revenues of $572 million, up 8% year-over-year; recurring and other revenue of $544 million, up 9% year-over-year.
Negative Updates
Conservative Full-Year Outlook Despite Q1 Beat
Management kept full-year guidance unchanged despite Q1 outperformance, implying expectations for a slowdown in recurring revenue growth later in the year and conservative assumptions for the remainder of 2026.
Read all updates
Q1-2026 Updates
Positive
Negative
Top-Line Growth
Total revenues of $572 million, up 8% year-over-year; recurring and other revenue of $544 million, up 9% year-over-year.
Read all positive updates
Company Guidance
Paycom reaffirmed its full‑year 2026 guidance, forecasting total revenues of $2.175–$2.195 billion (roughly 6.5% YoY growth at the midpoint), recurring and other revenue up 7–8% YoY, and adjusted EBITDA of $950–$970 million (about a 44% margin at the midpoint); the outlook includes approximately $103 million of interest on funds held for clients. The company cited strong Q1 results supporting the guide: total revenue $572 million (+8% YoY), recurring/other revenue $544 million (+9%), GAAP net income $156 million ($3.04 per diluted share), non‑GAAP net income $161 million ($3.15 per diluted share), and adjusted EBITDA $275 million (48.2%, +50 bps YoY). Paycom also noted capital‑allocation and balance‑sheet metrics relevant to the outlook: Q1 cash and cash equivalents of $154 million, average daily funds‑held balance of ~$3.1 billion (+8% YoY), a new 5‑year $2.125 billion credit facility with $675 million drawn, Q1 repurchases of ~8.4 million shares (~15% of 2025 shares) for $1.06 billion, a new $2 billion buyback authorization, and a next quarterly dividend of $0.375 per share.Paycom Financial Statement Overview
Summary
Income Statement
82
Very Positive
Balance Sheet
58
Neutral
Cash Flow
74
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.09B | 2.05B | 1.88B | 1.69B | 1.38B | 1.06B |
| Gross Profit | 1.67B | 1.61B | 1.55B | 1.42B | 1.16B | 893.64M |
| EBITDA | 829.60M | 799.10M | 798.30M | 588.20M | 484.80M | 323.18M |
| Net Income | 469.70M | 453.40M | 502.00M | 340.79M | 281.39M | 195.96M |
Balance Sheet | ||||||
| Total Assets | 4.82B | 7.60B | 5.86B | 4.20B | 3.90B | 3.22B |
| Cash, Cash Equivalents and Short-Term Investments | 153.90M | 370.00M | 402.00M | 294.00M | 400.73M | 277.98M |
| Total Debt | 763.60M | 152.20M | 83.40M | 75.90M | 29.00M | 29.16M |
| Total Liabilities | 4.01B | 5.87B | 4.28B | 2.89B | 2.72B | 2.32B |
| Stockholders Equity | 811.70M | 1.73B | 1.58B | 1.30B | 1.18B | 893.71M |
Cash Flow | ||||||
| Free Cash Flow | 442.60M | 408.00M | 341.00M | 288.21M | 228.31M | 193.17M |
| Operating Cash Flow | 707.00M | 678.90M | 533.90M | 485.04M | 365.10M | 319.36M |
| Investing Cash Flow | -262.10M | -611.20M | -22.20M | -196.71M | -23.29M | -257.67M |
| Financing Cash Flow | -437.50M | 1.02B | 1.11B | -274.66M | 254.59M | 165.72M |
Paycom Technical Analysis
Positive
126.93
Price Trends
127.30
Positive
132.33
Positive
162.96
Negative
Market Momentum
3.03
Negative
56.86
Neutral
40.82
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PAYC, the sentiment is Positive. The current price of 126.93 is below the 20-day moving average (MA) of 133.61, below the 50-day MA of 127.30, and below the 200-day MA of 162.96, indicating a neutral trend. The MACD of 3.03 indicates Negative momentum. The RSI at 56.86 is Neutral, neither overbought nor oversold. The STOCH value of 40.82 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PAYC.
Paycom Risk Analysis
Paycom disclosed 35 risk factors in its most recent earnings report. Paycom reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Paycom Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $6.05B | 13.18 | 22.36% | ― | 11.31% | 16.71% | |
74 Outperform | $6.56B | 9.97 | 31.03% | 0.94% | 9.37% | 23.47% | |
65 Neutral | $4.42B | 57.22 | 35.35% | ― | 18.89% | -7.44% | |
63 Neutral | $1.05B | -40.34 | 32.36% | ― | 13.03% | 7.07% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
57 Neutral | $4.20B | -21.14 | -13.47% | ― | 23.05% | 56.65% |
* Technology Sector Average
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Paycom Corporate Events
Executive/Board ChangesShareholder Meetings
Paycom Shareholders Back Board, Auditor and Executive Pay
Positive
May 7, 2026
Paycom Software, Inc. held its 2026 Annual Meeting of Stockholders on May 4, 2026, where shareholders elected Sharen J. Turney and J.C. Watts Jr. as Class I directors to serve until the 2029 annual meeting, reflecting continued support for the cur...
Stock BuybackDividends
Paycom Announces Dividend and New $2 Billion Buyback
Positive
May 4, 2026
On May 4, 2026, Paycom Software, Inc. announced that its board declared a regular quarterly cash dividend of $0.375 per share, payable on June 8, 2026, to stockholders of record as of May 26, 2026. The same day, the board also authorized a new sto...
Business Operations and StrategyPrivate Placements and Financing
Paycom Expands Senior Secured Revolving Credit Facility Capacity
Positive
Apr 23, 2026
On April 23, 2026, Paycom Software, Inc. entered into an amended and restated credit agreement that replaces its July 29, 2022 facility and establishes a senior secured revolving credit line of up to $2.125 billion, maturing April 23, 2031, with a...
Executive/Board Changes
Paycom Announces Board Member Resignation and Board Reduction
Neutral
Mar 26, 2026
Paycom Software, Inc. announced that board member Archana Vemulapalli has resigned from its Board of Directors and all related committees, effective March 31, 2026. Following her departure, disclosed as a March 23, 2026 notification, the board wil...
Business Operations and StrategyPrivate Placements and Financing
Paycom Expands Revolving Credit Facility to Boost Liquidity
Positive
Mar 12, 2026
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...
Stock Buyback
Paycom Expands Share Repurchase Authorization with Added Funds
Positive
Mar 5, 2026
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 roughl...
Business Operations and StrategyExecutive/Board ChangesRegulatory Filings and Compliance
Paycom Elevates Shane Hadlock to President and CCO
Positive
Feb 19, 2026
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 Of...
Dividends
Paycom Board Declares Regular Quarterly Cash Dividend
Positive
Feb 10, 2026
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, underscori...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.