PAYCOM SOFTWARE INC (PAYC)
US70432V1026 - Common Stock
PAYC gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 81 industry peers in the Professional Services industry. PAYC scores excellent points on both the profitability and health parts. This is a solid base for a good stock. PAYC is valued quite expensive, but it does show an excellent growth. These ratings would make PAYC suitable for growth and quality investing!
1. Profitability
1.1 Basic Checks
PAYC had positive earnings in the past year.
PAYC had a positive operating cash flow in the past year.
In the past 5 years PAYC has always been profitable.
In the past 5 years PAYC always reported a positive cash flow from operatings.
1.2 Ratios
PAYC's Return On Assets of 8.12% is fine compared to the rest of the industry. PAYC outperforms 80.00% of its industry peers.
With an excellent Return On Equity value of 26.15%, PAYC belongs to the best of the industry, outperforming 83.75% of the companies in the same industry.
The Return On Invested Capital of PAYC (19.59%) is better than 86.25% of its industry peers.
PAYC had an Average Return On Invested Capital over the past 3 years of 17.49%. This is significantly above the industry average of 12.24%.
The last Return On Invested Capital (19.59%) for PAYC is above the 3 year average (17.49%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.12% | ||
| ROE | 26.15% | ||
| ROIC | 19.59% |
ROA(3y)7.14%
ROA(5y)6.84%
ROE(3y)23.96%
ROE(5y)25.61%
ROIC(3y)17.49%
ROIC(5y)17.96%
1.3 Margins
The Profit Margin of PAYC (20.12%) is better than 91.25% of its industry peers.
In the last couple of years the Profit Margin of PAYC has declined.
The Operating Margin of PAYC (26.65%) is better than 91.25% of its industry peers.
In the last couple of years the Operating Margin of PAYC has declined.
Looking at the Gross Margin, with a value of 83.69%, PAYC belongs to the top of the industry, outperforming 93.75% of the companies in the same industry.
In the last couple of years the Gross Margin of PAYC has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 26.65% | ||
| PM (TTM) | 20.12% | ||
| GM | 83.69% |
OM growth 3Y6.41%
OM growth 5Y-2.77%
PM growth 3Y5.67%
PM growth 5Y-3.6%
GM growth 3Y-0.64%
GM growth 5Y-0.07%
2. Health
2.1 Basic Checks
PAYC has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
The number of shares outstanding for PAYC has been reduced compared to 1 year ago.
PAYC has less shares outstanding than it did 5 years ago.
PAYC has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.
2.2 Solvency
An Altman-Z score of 3.59 indicates that PAYC is not in any danger for bankruptcy at the moment.
With a decent Altman-Z score value of 3.59, PAYC is doing good in the industry, outperforming 67.50% of the companies in the same industry.
PAYC has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0 | ||
| Altman-Z | 3.59 |
ROIC/WACC2.12
WACC9.26%
2.3 Liquidity
A Current Ratio of 1.11 indicates that PAYC should not have too much problems paying its short term obligations.
PAYC has a worse Current ratio (1.11) than 65.00% of its industry peers.
A Quick Ratio of 1.11 indicates that PAYC should not have too much problems paying its short term obligations.
Looking at the Quick ratio, with a value of 1.11, PAYC is doing worse than 63.75% of the companies in the same industry.
PAYC does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.11 | ||
| Quick Ratio | 1.11 |
3. Growth
3.1 Past
PAYC shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 26.30%, which is quite impressive.
The Earnings Per Share has been growing by 23.85% on average over the past years. This is a very strong growth
The Revenue has grown by 23.15% in the past year. This is a very strong growth!
Measured over the past years, PAYC shows a very strong growth in Revenue. The Revenue has been growing by 24.50% on average per year.
EPS 1Y (TTM)26.3%
EPS 3Y30.63%
EPS 5Y23.85%
EPS growth Q2Q11.56%
Revenue 1Y (TTM)23.15%
Revenue growth 3Y26.26%
Revenue growth 5Y24.5%
Revenue growth Q2Q17.27%
3.2 Future
The Earnings Per Share is expected to grow by 11.85% on average over the next years. This is quite good.
PAYC is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 11.73% yearly.
EPS Next Y0.9%
EPS Next 2Y7.52%
EPS Next 3Y11.05%
EPS Next 5Y11.85%
Revenue Next Year11.36%
Revenue Next 2Y11.91%
Revenue Next 3Y12.56%
Revenue Next 5Y11.73%
3.3 Evolution
The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
The estimated forward Revenue growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
4. Valuation
4.1 Price/Earnings Ratio
PAYC is valuated rather expensively with a Price/Earnings ratio of 24.39.
Compared to the rest of the industry, the Price/Earnings ratio of PAYC is on the same level as its industry peers.
Compared to an average S&P500 Price/Earnings ratio of 24.67, PAYC is valued at the same level.
A Price/Forward Earnings ratio of 24.17 indicates a rather expensive valuation of PAYC.
The rest of the industry has a similar Price/Forward Earnings ratio as PAYC.
When comparing the Price/Forward Earnings ratio of PAYC to the average of the S&P500 Index (21.02), we can say PAYC is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.39 | ||
| Fwd PE | 24.17 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as PAYC.
PAYC's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 38.29 | ||
| EV/EBITDA | 18.82 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
PAYC has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)27.12
PEG (5Y)1.02
EPS Next 2Y7.52%
EPS Next 3Y11.05%
5. Dividend
5.1 Amount
With a yearly dividend of 0.80%, PAYC is not a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 2.07, PAYC pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.40, PAYC's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.8% |
5.2 History
PAYC does not have a reliable dividend history as it only pays dividend since a couple or years.
Dividend Growth(5Y)N/A
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
PAYC pays out 19.03% of its income as dividend. This is a sustainable payout ratio.
DP19.03%
EPS Next 2Y7.52%
EPS Next 3Y11.05%
PAYCOM SOFTWARE INC
NYSE:PAYC (5/1/2024, 2:26:25 PM)
189.76
+1.78 (+0.95%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap11.03B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.8% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
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EPS beat(16)
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Revenue beat(2)
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PT rev (1m)
PT rev (3m)
EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
Revenue NQ rev (3m)
Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 24.39 | ||
| Fwd PE | 24.17 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)27.12
PEG (5Y)1.02
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.12% | ||
| ROE | 26.15% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 26.65% | ||
| PM (TTM) | 20.12% | ||
| GM | 83.69% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.4
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.11 | ||
| Quick Ratio | 1.11 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
Growth
EPS 1Y (TTM)26.3%
EPS 3Y30.63%
EPS 5Y
EPS growth Q2Q
EPS Next Y0.9%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)23.15%
Revenue growth 3Y26.26%
Revenue growth 5Y
Revenue growth Q2Q
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y