PAYCOM SOFTWARE INC (PAYC) Stock Fundamental Analysis
NYSE:PAYC - New York Stock Exchange, Inc. - US70432V1026 - Common Stock - Currency: USD
PAYC gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 82 industry peers in the Professional Services industry. Both the health and profitability get an excellent rating, making PAYC a very profitable company, without any liquidiy or solvency issues. PAYC is quite expensive at the moment. It does show a decent growth rate. This makes PAYC very considerable for quality investing!
1. Profitability
1.1 Basic Checks
In the past year PAYC was profitable.
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 8.57% is fine compared to the rest of the industry. PAYC outperforms 75.61% of its industry peers.
PAYC has a better Return On Equity (31.85%) than 80.49% of its industry peers.
The Return On Invested Capital of PAYC (24.28%) is better than 93.90% of its industry peers.
The Average Return On Invested Capital over the past 3 years for PAYC is significantly above the industry average of 13.48%.
The 3 year average ROIC (21.04%) for PAYC is below the current ROIC(24.28%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.57% | ||
| ROE | 31.85% | ||
| ROIC | 24.28% |
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
Looking at the Profit Margin, with a value of 26.66%, PAYC belongs to the top of the industry, outperforming 93.90% of the companies in the same industry.
PAYC's Profit Margin has improved in the last couple of years.
PAYC has a Operating Margin of 33.68%. This is amongst the best in the industry. PAYC outperforms 96.34% of its industry peers.
In the last couple of years the Operating Margin of PAYC has grown nicely.
The Gross Margin of PAYC (82.23%) is better than 90.24% 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 | 33.68% | ||
| PM (TTM) | 26.66% | ||
| GM | 82.23% |
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.
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 3.05 indicates that PAYC is not in any danger for bankruptcy at the moment.
PAYC has a Altman-Z score (3.05) which is comparable to the rest of the 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 | 3.05 |
ROIC/WACC2.75
WACC8.83%
2.3 Liquidity
A Current Ratio of 1.10 indicates that PAYC should not have too much problems paying its short term obligations.
PAYC has a worse Current ratio (1.10) than 60.98% of its industry peers.
PAYC has a Quick Ratio of 1.10. This is a normal value and indicates that PAYC is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 1.10, PAYC is doing worse than 60.98% 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 | 1.1 | ||
| Quick Ratio | 1.1 |
3. Growth
3.1 Past
PAYC shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 5.40%.
PAYC shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 18.56% yearly.
Looking at the last year, PAYC shows a quite strong growth in Revenue. The Revenue has grown by 11.19% in the last year.
PAYC shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 20.62% yearly.
EPS 1Y (TTM)5.4%
EPS 3Y22.42%
EPS 5Y18.56%
EPS Q2Q%20.21%
Revenue 1Y (TTM)11.19%
Revenue growth 3Y21.29%
Revenue growth 5Y20.62%
Sales Q2Q%13.62%
3.2 Future
The Earnings Per Share is expected to grow by 10.16% 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 8.20% yearly.
EPS Next Y8.1%
EPS Next 2Y9.85%
EPS Next 3Y11.1%
EPS Next 5Y10.16%
Revenue Next Year8.23%
Revenue Next 2Y8.91%
Revenue Next 3Y9.72%
Revenue Next 5Y8.2%
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.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 27.70, which means the current valuation is very expensive for PAYC.
PAYC's Price/Earnings is on the same level as the industry average.
PAYC's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 28.88.
A Price/Forward Earnings ratio of 25.62 indicates a quite expensive valuation of PAYC.
Compared to the rest of the industry, the Price/Forward Earnings ratio of PAYC is on the same level as its industry peers.
PAYC is valuated rather expensively when we compare the Price/Forward Earnings ratio to 21.20, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.7 | ||
| Fwd PE | 25.62 |
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 | 39.03 | ||
| EV/EBITDA | 16.27 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The excellent profitability rating of PAYC may justify a higher PE ratio.
PEG (NY)3.42
PEG (5Y)1.49
EPS Next 2Y9.85%
EPS Next 3Y11.1%
5. Dividend
5.1 Amount
PAYC has a yearly dividend return of 0.66%, which is pretty low.
Compared to an average industry Dividend Yield of 2.37, PAYC pays a bit more dividend than its industry peers.
With a Dividend Yield of 0.66, PAYC pays less dividend than the S&P500 average, which is at 2.45.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.66% |
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
PAYC pays out 16.89% of its income as dividend. This is a sustainable payout ratio.
DP16.89%
EPS Next 2Y9.85%
EPS Next 3Y11.1%
227.1
+0.71 (+0.31%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)
Earnings (Next)
Inst Owners87.3%
Inst Owner Change0.66%
Ins Owners5.12%
Ins Owner Change-0.39%
Market Cap13.14B
Analysts70
Price Target229.21 (0.93%)
Short Float %3.26%
Short Ratio2.39
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.66% |
Yearly Dividend1.51
Dividend Growth(5Y)N/A
DP16.89%
Div Incr Years1
Div Non Decr Years1
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)8.71%
Min EPS beat(2)1.82%
Max EPS beat(2)15.6%
EPS beat(4)3
Avg EPS beat(4)5.06%
Min EPS beat(4)-0.71%
Max EPS beat(4)15.6%
EPS beat(8)6
Avg EPS beat(8)4.58%
EPS beat(12)10
Avg EPS beat(12)6.07%
EPS beat(16)13
Avg EPS beat(16)5.53%
Revenue beat(2)1
Avg Revenue beat(2)-0.09%
Min Revenue beat(2)-0.87%
Max Revenue beat(2)0.69%
Revenue beat(4)1
Avg Revenue beat(4)-0.77%
Min Revenue beat(4)-1.72%
Max Revenue beat(4)0.69%
Revenue beat(8)2
Avg Revenue beat(8)-0.86%
Revenue beat(12)5
Avg Revenue beat(12)-0.51%
Revenue beat(16)8
Avg Revenue beat(16)-0.24%
PT rev (1m)-0.31%
PT rev (3m)2.76%
EPS NQ rev (1m)-0.11%
EPS NQ rev (3m)-5.96%
EPS NY rev (1m)-0.06%
EPS NY rev (3m)-0.47%
Revenue NQ rev (1m)-0.17%
Revenue NQ rev (3m)-4.87%
Revenue NY rev (1m)-0.1%
Revenue NY rev (3m)-1.71%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 27.7 | ||
| Fwd PE | 25.62 | ||
| P/S | 6.98 | ||
| P/FCF | 39.03 | ||
| P/OCF | 24.61 | ||
| P/B | 8.34 | ||
| P/tB | 8.89 | ||
| EV/EBITDA | 16.27 |
EPS(TTM)8.2
EY3.61%
EPS(NY)8.86
Fwd EY3.9%
FCF(TTM)5.82
FCFY2.56%
OCF(TTM)9.23
OCFY4.06%
SpS32.55
BVpS27.24
TBVpS25.55
PEG (NY)3.42
PEG (5Y)1.49
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.57% | ||
| ROE | 31.85% | ||
| ROCE | 32.48% | ||
| ROIC | 24.28% | ||
| ROICexc | 30.57% | ||
| ROICexgc | 32.63% | ||
| OM | 33.68% | ||
| PM (TTM) | 26.66% | ||
| GM | 82.23% | ||
| FCFM | 17.87% |
ROA(3y)7.97%
ROA(5y)7.1%
ROE(3y)27.27%
ROE(5y)25.12%
ROIC(3y)21.04%
ROIC(5y)18.84%
ROICexc(3y)26.79%
ROICexc(5y)23.85%
ROICexgc(3y)29.01%
ROICexgc(5y)25.99%
ROCE(3y)28.15%
ROCE(5y)25.21%
ROICexcg growth 3Y12.94%
ROICexcg growth 5Y1.1%
ROICexc growth 3Y15.14%
ROICexc growth 5Y1.63%
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%
F-Score6
Asset Turnover0.32
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0 | ||
| Debt/EBITDA | 0 | ||
| Cap/Depr | 135.23% | ||
| Cap/Sales | 10.48% | ||
| Interest Coverage | 317.16 | ||
| Cash Conversion | 68.43% | ||
| Profit Quality | 67.05% | ||
| Current Ratio | 1.1 | ||
| Quick Ratio | 1.1 | ||
| Altman-Z | 3.05 |
F-Score6
WACC8.83%
ROIC/WACC2.75
Cap/Depr(3y)151.85%
Cap/Depr(5y)163.91%
Cap/Sales(3y)10.68%
Cap/Sales(5y)11.04%
Profit Quality(3y)77.58%
Profit Quality(5y)84.82%
High Growth Momentum
Growth
EPS 1Y (TTM)5.4%
EPS 3Y22.42%
EPS 5Y18.56%
EPS Q2Q%20.21%
EPS Next Y8.1%
EPS Next 2Y9.85%
EPS Next 3Y11.1%
EPS Next 5Y10.16%
Revenue 1Y (TTM)11.19%
Revenue growth 3Y21.29%
Revenue growth 5Y20.62%
Sales Q2Q%13.62%
Revenue Next Year8.23%
Revenue Next 2Y8.91%
Revenue Next 3Y9.72%
Revenue Next 5Y8.2%
EBIT growth 1Y40.55%
EBIT growth 3Y35.74%
EBIT growth 5Y22.9%
EBIT Next Year41.43%
EBIT Next 3Y21.31%
EBIT Next 5Y17.51%
FCF growth 1Y16.79%
FCF growth 3Y20.33%
FCF growth 5Y20.7%
OCF growth 1Y10.07%
OCF growth 3Y18.68%
OCF growth 5Y18.94%