Paycom (PAYC) AI Stock Analysis

• Market Cap: $13.14B
• Dividend Yield: 0.66%
• Average Volume (3M): 573.87K
• Price to Earnings (P/E): 32.4
• Beta (1Y): 0.71
• Revenue Growth: 9.86%
• EPS Growth: -14.34%
• Country: US
• Employees: 7,306
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 2.80
• Shares Outstanding: 57,819,756
• 10 Day Avg. Volume: 742,927
• 30 Day Avg. Volume: 573,866
• PEG Ratio: 3.90
• Price to Book (P/B): 8.96
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 42.87
• Enterprise Value/Market Cap: 1.09
• Enterprise Value/Revenue: 1.98
• Enterprise Value/Gross Profit: 9.66
• Enterprise Value/Ebitda: 4.50
• 1Y Price Target: $231.55
• Price Target Upside: 0.06% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 14

• Rating: 71 Outperform
• Price Target: $246.00 ▲(6.31%Upside)

Paycom's overall score is driven by its strong financial performance and positive earnings outlook. However, technical analysis indicates bearish momentum, and the valuation suggests potential overvaluation. The company's strategic initiatives and shareholder support contribute positively to its prospects.

Positive Factors

Profitability

Paycom results showed strong gains in profitability that may outweigh recurring revenue upside.

Revenue Growth

Revenue increased to approximately $531 million, above consensus, with nearly all the beat coming from recurring revenue.

Negative Factors

Growth and Margin Visibility

Paycom is navigating turbulence caused by BETI, which has decreased near-term growth and margin visibility.

Margin Expansion

It may be difficult for margins to continue expanding at such a robust clip, suggesting guidance may not be de-risked into a potential period of macro uncertainty.

Paycom Business Overview & Revenue Model

Company Description

Paycom Software, Inc. is a leading provider of comprehensive, cloud-based human capital management (HCM) software solutions for businesses across various industries. Headquartered in Oklahoma City, Oklahoma, Paycom offers a suite of services that streamline the entire employment lifecycle from talent acquisition to retirement. Their core offerings include payroll processing, time and labor management, talent management, and human resources management, all integrated into a single platform to enhance workforce efficiency and compliance.

How the Company Makes Money

Paycom makes money primarily through its subscription-based pricing model, where clients pay recurring fees for access to its cloud-based HCM software platform. The company's revenue streams include software-as-a-service (SaaS) subscriptions, which provide steady income through monthly or annual contracts, and additional fees for specialized services such as data migration, system implementation, and training. Paycom also benefits from a high client retention rate and cross-selling opportunities as clients often expand their use of additional modules and services over time. Significant factors contributing to Paycom's earnings include its scalable technology infrastructure, continuous software enhancements, and a strong focus on customer service, which collectively drive client growth and satisfaction.

Paycom Financial Statement Overview

Summary

Paycom demonstrates a strong financial position with consistent revenue growth, high profitability margins, and effective cash flow management. The company shows efficient operational and financial management, with strong returns on equity and minimal leverage risk. However, maintaining liquidity and further enhancing free cash flow conversion will be crucial to sustaining its growth trajectory and financial health.

Income Statement

Paycom has demonstrated strong growth in its revenue with a notable year-over-year increase from $1.69 billion to $1.88 billion, reflecting a revenue growth rate of approximately 11.2%. The company maintains a high gross profit margin of 82.2% and a robust net profit margin of 26.7%, indicating efficient cost management and consistent profitability. EBIT and EBITDA margins are also healthy at 33.7% and 37.8% respectively, showcasing operational efficiency. Overall, the income statement reflects a company with strong growth momentum and effective margin management.

Balance Sheet

Paycom's balance sheet indicates a stable financial position with a debt-to-equity ratio of 0.05, signifying low financial leverage and risk. The equity ratio stands at 26.9%, demonstrating a solid equity base relative to total assets. The return on equity is impressive at 31.9%, highlighting effective utilization of equity to generate profit. However, the relatively low cash and short-term investments compared to total liabilities might pose liquidity risks. Overall, the balance sheet shows a well-managed capital structure with strong equity returns but potential liquidity concerns.

Cash Flow

Paycom's cash flow statement reveals strong cash generation capabilities with an operating cash flow to net income ratio of 1.06, indicating efficient conversion of net income into cash. Free cash flow has grown from $288.2 million to $341 million, a solid growth rate of approximately 18.3%. The free cash flow to net income ratio is 0.68, showing a satisfactory level of free cash flow relative to profits. Overall, the cash flow statement suggests robust cash management and growing free cash flow, supporting future investments and financial flexibility.

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

Paycom Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 231.40
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PAYC, the sentiment is Neutral. The current price of 231.4 is below the 20-day moving average (MA) of 245.30, below the 50-day MA of 243.03, and above the 200-day MA of 213.26, indicating a neutral trend. The MACD of -5.91 indicates Positive momentum. The RSI at 39.49 is Neutral, neither overbought nor oversold. The STOCH value of 26.11 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for PAYC.

Paycom Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MANH	78 Outperform	$11.98B	56.29	89.60%	―	9.18%	14.35%
PCTY	71 Outperform	$9.92B	45.18	19.70%	―	14.63%	17.15%
PAYC	71 Outperform	$13.14B	32.44	24.99%	0.66%	9.86%	-14.34%
BILL	63 Neutral	$4.69B	482.28	0.97%	―	14.52%	―
Sector *	63 Neutral	£571.22M	24.45	-6.00%	2.40%	3.52%	-29.29%
DUOL	61 Neutral	$18.69B	204.78	12.06%	―	39.14%	103.72%

Paycom Corporate Events

Paycom Holds 2025 Annual Meeting of Stockholders

On May 5, 2025, Paycom Software, Inc. held its 2025 Annual Meeting of Stockholders, where 50,440,118.15 shares were represented. Key outcomes included the election of two Class III directors, the ratification of Grant Thornton LLP as the independent auditor for 2025, and the approval of executive compensation, reflecting strong shareholder support for the company’s governance and strategic direction.