Paycom (PAYC) AI Stock Analysis

• Market Cap: $8.98B
• Dividend Yield: 0.94%
• Average Volume (3M): 784.10K
• Price to Earnings (P/E): 19.8
• Beta (1Y): 0.87
• Revenue Growth: 9.72%
• EPS Growth: -2.69%
• Country: US
• Employees: 7,306
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 1.94
• Shares Outstanding: 56,269,005
• 10 Day Avg. Volume: 934,986
• 30 Day Avg. Volume: 784,099
• 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: 1.28
• Enterprise Value/Revenue: 5.72
• Enterprise Value/Gross Profit: 7.00
• Enterprise Value/Ebitda: 14.64
• 1Y Price Target: $201.82
• Price Target Upside: 26.43% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 14
• EPS Forecast (FY): 9.24
• Revenue Forecast (FY): $2.05B

• Rating: 76 Outperform
• Price Target: $185.00 ▲(15.89% Upside)

Paycom's strong financial performance and positive earnings call are the most significant factors contributing to the overall score. The company's robust revenue growth, profitability, and strategic investments position it well for future growth. However, technical analysis indicates a bearish trend, which slightly offsets the positive outlook. The valuation is fair, supporting the company's growth prospects.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong market demand and effective sales strategies, reinforcing Paycom's competitive position in the HCM software industry.

Innovative Product Launches

Innovative products like 'IWant' and 'Beti' enhance client engagement and operational efficiency, providing a competitive edge and supporting long-term growth.

Cash Flow Strength

Strong cash flow growth ensures financial flexibility and supports strategic investments, enhancing Paycom's ability to capitalize on growth opportunities.

Negative Factors

Decline in Interest Income

Declining interest income could impact overall profitability, requiring Paycom to rely more on core business growth to maintain earnings levels.

Workforce Reductions

While automation improves efficiency, significant workforce reductions may affect employee morale and could lead to operational challenges if not managed carefully.

Challenges in Achieving Historical Beat Levels

Inability to consistently exceed guidance may signal challenges in maintaining historical growth momentum, potentially impacting investor confidence.

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

Paycom demonstrates strong financial health 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, 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	2.00B	1.88B	1.69B	1.38B	1.06B	841.43M
Gross Profit	1.64B	1.55B	1.42B	1.16B	893.64M	717.89M
EBITDA	782.19M	798.30M	588.20M	484.80M	323.18M	239.33M
Net Income	453.20M	502.00M	340.79M	281.39M	195.96M	143.45M
Balance Sheet
Total Assets	4.25B	5.86B	4.20B	3.90B	3.22B	2.61B
Cash, Cash Equivalents and Short-Term Investments	375.00M	402.00M	294.00M	400.73M	277.98M	151.71M
Total Debt	84.50M	83.40M	75.90M	29.00M	29.16M	30.89M
Total Liabilities	2.54B	4.28B	2.89B	2.72B	2.32B	1.95B
Stockholders Equity	1.71B	1.58B	1.30B	1.18B	893.71M	655.64M
Cash Flow
Free Cash Flow	392.54M	341.00M	288.21M	228.31M	193.17M	133.10M
Operating Cash Flow	641.29M	533.90M	485.04M	365.10M	319.36M	227.21M
Investing Cash Flow	-714.94M	-22.20M	-196.71M	-23.29M	-257.67M	-117.88M
Financing Cash Flow	29.43M	1.11B	-274.66M	254.59M	165.72M	-165.91M

Paycom Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 159.63
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

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 159.63 is below the 20-day moving average (MA) of 163.71, below the 50-day MA of 174.22, and below the 200-day MA of 213.72, indicating a bearish trend. The MACD of -2.59 indicates Negative momentum. The RSI at 39.13 is Neutral, neither overbought nor oversold. The STOCH value of 27.59 is Neutral, 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	76 Outperform	$8.98B	19.84	28.56%	0.94%	9.72%	-2.69%
PCTY	71 Outperform	$8.27B	38.06	20.42%	―	13.30%	2.80%
DAY	67 Neutral	$11.06B	-73.51	-5.71%	―	11.73%	-376.77%
CVLT	65 Neutral	$5.59B	71.48	32.87%	―	22.02%	-55.25%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
PRCH	57 Neutral	$952.56M	37.05	―	―	-2.13%	―
KC	51 Neutral	$3.37B	-20.65	-15.89%	―	24.26%	55.58%

Paycom Corporate Events

Paycom Announces Quarterly Cash Dividend for Shareholders

On November 3, 2025, Paycom Software, Inc. announced a regular quarterly cash dividend of $0.375 per share, to be paid on December 8, 2025, to stockholders of record as of November 24, 2025. This announcement underscores Paycom’s commitment to returning value to its shareholders and reflects its strong financial position in the human capital management industry.

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.