PAYCOM SOFTWARE INC (PAYC) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:PAYC - US70432V1026 - Common Stock
152.57 USD
+3.39 (+2.27%)
152.57 USD
0 (0%)
PAYC gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 88 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 not valued too expensively and it also shows a decent growth rate. This makes PAYC very considerable for 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.
- Each year in the past 5 years PAYC had a positive operating cash flow.
1.2 Ratios
- Looking at the Return On Assets, with a value of 10.67%, PAYC belongs to the top of the industry, outperforming 84.09% of the companies in the same industry.
- With an excellent Return On Equity value of 26.51%, PAYC belongs to the best of the industry, outperforming 81.82% of the companies in the same industry.
- PAYC has a better Return On Invested Capital (19.27%) than 90.91% of its industry peers.
- PAYC had an Average Return On Invested Capital over the past 3 years of 21.04%. This is significantly above the industry average of 11.85%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.67% | ||
| ROE | 26.51% | ||
| ROIC | 19.27% |
ROA(3y)7.97%
ROA(5y)7.1%
ROE(3y)27.27%
ROE(5y)25.12%
ROIC(3y)21.04%
ROIC(5y)18.84%
1.3 Margins
- PAYC has a Profit Margin of 22.64%. This is amongst the best in the industry. PAYC outperforms 92.05% of its industry peers.
- In the last couple of years the Profit Margin of PAYC has grown nicely.
- The Operating Margin of PAYC (27.91%) is better than 95.45% of its industry peers.
- In the last couple of years the Operating Margin of PAYC has grown nicely.
- PAYC's Gross Margin of 82.95% is amongst the best of the industry. PAYC outperforms 94.32% of its industry peers.
- 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 | 27.91% | ||
| PM (TTM) | 22.64% | ||
| GM | 82.95% |
OM growth 3Y11.92%
OM growth 5Y1.9%
PM growth 3Y12.81%
PM growth 5Y1.73%
GM growth 3Y-0.97%
GM growth 5Y-0.69%
2. Health
2.1 Basic Checks
- With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), PAYC is creating value.
- The number of shares outstanding for PAYC has been reduced compared to 1 year ago.
- The number of shares outstanding for PAYC has been reduced compared to 5 years ago.
- There is no outstanding debt for PAYC. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
2.2 Solvency
- An Altman-Z score of 3.73 indicates that PAYC is not in any danger for bankruptcy at the moment.
- PAYC has a Altman-Z score of 3.73. This is in the better half of the industry: PAYC outperforms 70.45% of its industry peers.
- There is no outstanding debt for PAYC. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0 | ||
| Altman-Z | 3.73 |
ROIC/WACC2.16
WACC8.9%
2.3 Liquidity
- PAYC has a Current Ratio of 1.22. This is a normal value and indicates that PAYC is financially healthy and should not expect problems in meeting its short term obligations.
- PAYC has a worse Current ratio (1.22) than 60.23% of its industry peers.
- A Quick Ratio of 1.22 indicates that PAYC should not have too much problems paying its short term obligations.
- PAYC has a worse Quick ratio (1.22) than 60.23% of its industry peers.
- The current and quick ratio evaluation for PAYC is rather negative, while it does have 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 | 1.22 | ||
| Quick Ratio | 1.22 |
3. Growth
3.1 Past
- The Earnings Per Share has grown by an nice 16.77% over the past year.
- PAYC shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 18.56% yearly.
- The Revenue has grown by 9.72% in the past year. This is quite good.
- The Revenue has been growing by 20.62% on average over the past years. This is a very strong growth!
EPS 1Y (TTM)16.77%
EPS 3Y22.42%
EPS 5Y18.56%
EPS Q2Q%16.17%
Revenue 1Y (TTM)9.72%
Revenue growth 3Y21.29%
Revenue growth 5Y20.62%
Sales Q2Q%9.15%
3.2 Future
- Based on estimates for the next years, PAYC will show a quite strong growth in Earnings Per Share. The EPS will grow by 12.97% on average per year.
- Based on estimates for the next years, PAYC will show a small growth in Revenue. The Revenue will grow by 7.12% on average per year.
EPS Next Y15.33%
EPS Next 2Y11.88%
EPS Next 3Y11.88%
EPS Next 5Y12.97%
Revenue Next Year9.59%
Revenue Next 2Y9.19%
Revenue Next 3Y9.29%
Revenue Next 5Y7.12%
3.3 Evolution
- Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
- The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
- PAYC is valuated correctly with a Price/Earnings ratio of 16.73.
- Based on the Price/Earnings ratio, PAYC is valued a bit cheaper than 69.32% of the companies in the same industry.
- The average S&P500 Price/Earnings ratio is at 27.32. PAYC is valued slightly cheaper when compared to this.
- With a Price/Forward Earnings ratio of 14.87, PAYC is valued correctly.
- 71.59% of the companies in the same industry are more expensive than PAYC, based on the Price/Forward Earnings ratio.
- Compared to an average S&P500 Price/Forward Earnings ratio of 24.32, PAYC is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 16.73 | ||
| Fwd PE | 14.87 |
4.2 Price Multiples
- Based on the Enterprise Value to EBITDA ratio, PAYC is valued a bit cheaper than the industry average as 75.00% of the companies are valued more expensively.
- Based on the Price/Free Cash Flow ratio, PAYC is valued a bit cheaper than 69.32% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 21.48 | ||
| EV/EBITDA | 11.04 |
4.3 Compensation for Growth
- PAYC's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
- PAYC has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)1.09
PEG (5Y)0.9
EPS Next 2Y11.88%
EPS Next 3Y11.88%
5. Dividend
5.1 Amount
- PAYC has a yearly dividend return of 0.98%, which is pretty low.
- In the last 3 months the price of PAYC has falen by -23.53%. A price decline artificially increases the dividend yield. It may be a sign investors do not expect the dividend to last.
- Compared to an average industry Dividend Yield of 1.41, PAYC pays a bit more dividend than its industry peers.
- With a Dividend Yield of 0.98, PAYC pays less dividend than the S&P500 average, which is at 1.83.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.98% |
5.2 History
- PAYC has been paying a dividend for less than 5 years, so it still needs to build a track record.
Dividend Growth(5Y)N/A
Div Incr Years1
Div Non Decr Years1
5.3 Sustainability
- 18.80% of the earnings are spent on dividend by PAYC. This is a low number and sustainable payout ratio.
DP18.8%
EPS Next 2Y11.88%
EPS Next 3Y11.88%
PAYCOM SOFTWARE INC / PAYC FAQ
What is the fundamental rating for PAYC stock?
ChartMill assigns a fundamental rating of 7 / 10 to PAYC.
Can you provide the valuation status for PAYCOM SOFTWARE INC?
ChartMill assigns a valuation rating of 6 / 10 to PAYCOM SOFTWARE INC (PAYC). This can be considered as Fairly Valued.
How profitable is PAYCOM SOFTWARE INC (PAYC) stock?
PAYCOM SOFTWARE INC (PAYC) has a profitability rating of 9 / 10.
What are the PE and PB ratios of PAYCOM SOFTWARE INC (PAYC) stock?
The Price/Earnings (PE) ratio for PAYCOM SOFTWARE INC (PAYC) is 16.73 and the Price/Book (PB) ratio is 4.9.
How sustainable is the dividend of PAYCOM SOFTWARE INC (PAYC) stock?
The dividend rating of PAYCOM SOFTWARE INC (PAYC) is 3 / 10 and the dividend payout ratio is 18.8%.