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. PAYC has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. While showing a medium growth rate, PAYC is valued expensive at the moment. These ratings would make PAYC suitable 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.
In the past 5 years PAYC always reported a positive cash flow from operatings.
1.2 Ratios
PAYC's Return On Assets of 8.62% is amongst the best of the industry. PAYC outperforms 80.49% of its industry peers.
PAYC's Return On Equity of 22.96% is fine compared to the rest of the industry. PAYC outperforms 76.83% of its industry peers.
PAYC's Return On Invested Capital of 19.08% is amongst the best of the industry. PAYC outperforms 90.24% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for PAYC is significantly above the industry average of 12.49%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.62% | ||
| ROE | 22.96% | ||
| ROIC | 19.08% |
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 20.60%, PAYC belongs to the top of the industry, outperforming 93.90% of the companies in the same industry.
In the last couple of years the Profit Margin of PAYC has grown nicely.
Looking at the Operating Margin, with a value of 27.88%, PAYC belongs to the top of the industry, outperforming 92.68% of the companies in the same industry.
PAYC's Operating Margin has improved in the last couple of years.
PAYC's Gross Margin of 82.20% is amongst the best of the industry. PAYC outperforms 91.46% of its industry peers.
PAYC's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 27.88% | ||
| PM (TTM) | 20.6% | ||
| GM | 82.2% |
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
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so PAYC is creating value.
The number of shares outstanding for PAYC has been reduced compared to 1 year ago.
Compared to 5 years ago, PAYC has less shares outstanding
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
PAYC has an Altman-Z score of 4.30. This indicates that PAYC is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of PAYC (4.30) is better than 74.39% of its industry peers.
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 | 4.3 |
ROIC/WACC2.14
WACC8.91%
2.3 Liquidity
PAYC has a Current Ratio of 1.20. This is a normal value and indicates that PAYC is financially healthy and should not expect problems in meeting its short term obligations.
The Current ratio of PAYC (1.20) is worse than 62.20% of its industry peers.
PAYC has a Quick Ratio of 1.20. 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 1.20, PAYC is doing worse than 62.20% 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 | 1.2 | ||
| Quick Ratio | 1.2 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 11.88% over the past year.
The Earnings Per Share has been growing by 18.56% on average over the past years. This is quite good.
The Revenue has grown by 11.19% in the past year. This is quite good.
PAYC shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 20.62% yearly.
EPS 1Y (TTM)11.88%
EPS 3Y22.42%
EPS 5Y18.56%
EPS Q2Q%27.16%
Revenue 1Y (TTM)11.19%
Revenue growth 3Y21.29%
Revenue growth 5Y20.62%
Sales Q2Q%10.53%
3.2 Future
The Earnings Per Share is expected to grow by 12.40% on average over the next years. This is quite good.
Based on estimates for the next years, PAYC will show a small growth in Revenue. The Revenue will grow by 7.06% on average per year.
EPS Next Y11.58%
EPS Next 2Y11.2%
EPS Next 3Y12.59%
EPS Next 5Y12.4%
Revenue Next Year8.6%
Revenue Next 2Y8.88%
Revenue Next 3Y9.43%
Revenue Next 5Y7.06%
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.
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
A Price/Earnings ratio of 25.97 indicates a quite expensive valuation of PAYC.
The rest of the industry has a similar Price/Earnings ratio as PAYC.
When comparing the Price/Earnings ratio of PAYC to the average of the S&P500 Index (26.48), we can say PAYC is valued inline with the index average.
With a Price/Forward Earnings ratio of 22.67, PAYC is valued on the expensive side.
PAYC's Price/Forward Earnings is on the same level as the industry average.
Compared to an average S&P500 Price/Forward Earnings ratio of 34.04, PAYC is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.97 | ||
| Fwd PE | 22.67 |
4.2 Price Multiples
PAYC's Enterprise Value to EBITDA is on the same level as the industry average.
PAYC's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 33.84 | ||
| EV/EBITDA | 18.27 |
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.
A more expensive valuation may be justified as PAYC's earnings are expected to grow with 12.59% in the coming years.
PEG (NY)2.24
PEG (5Y)1.4
EPS Next 2Y11.2%
EPS Next 3Y12.59%
5. Dividend
5.1 Amount
With a yearly dividend of 0.64%, PAYC is not a good candidate for dividend investing.
PAYC's Dividend Yield is a higher than the industry average which is at 2.29.
With a Dividend Yield of 0.64, PAYC pays less dividend than the S&P500 average, which is at 2.39.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.64% |
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 21.48% of its income as dividend. This is a sustainable payout ratio.
DP21.48%
EPS Next 2Y11.2%
EPS Next 3Y12.59%
229.85
-3.53 (-1.51%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)
Earnings (Next)
Inst Owners91.75%
Inst Owner Change0.24%
Ins Owners5.18%
Ins Owner Change0.5%
Market Cap12.88B
Analysts69.6
Price Target250.63 (9.04%)
Short Float %4.29%
Short Ratio3.77
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.64% |
Yearly Dividend1.51
Dividend Growth(5Y)N/A
DP21.48%
Div Incr Years1
Div Non Decr Years1
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)11.34%
Min EPS beat(2)7.08%
Max EPS beat(2)15.6%
EPS beat(4)3
Avg EPS beat(4)5.95%
Min EPS beat(4)-0.71%
Max EPS beat(4)15.6%
EPS beat(8)6
Avg EPS beat(8)5.16%
EPS beat(12)10
Avg EPS beat(12)6.12%
EPS beat(16)13
Avg EPS beat(16)5.86%
Revenue beat(2)1
Avg Revenue beat(2)-0.26%
Min Revenue beat(2)-1.22%
Max Revenue beat(2)0.69%
Revenue beat(4)1
Avg Revenue beat(4)-0.78%
Min Revenue beat(4)-1.72%
Max Revenue beat(4)0.69%
Revenue beat(8)2
Avg Revenue beat(8)-0.97%
Revenue beat(12)4
Avg Revenue beat(12)-0.7%
Revenue beat(16)8
Avg Revenue beat(16)-0.21%
PT rev (1m)0.13%
PT rev (3m)9.34%
EPS NQ rev (1m)-0.11%
EPS NQ rev (3m)0.48%
EPS NY rev (1m)0.01%
EPS NY rev (3m)3.21%
Revenue NQ rev (1m)-0.02%
Revenue NQ rev (3m)-0.09%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.34%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 25.97 | ||
| Fwd PE | 22.67 | ||
| P/S | 6.73 | ||
| P/FCF | 33.84 | ||
| P/OCF | 22.68 | ||
| P/B | 7.5 | ||
| P/tB | 7.95 | ||
| EV/EBITDA | 18.27 |
EPS(TTM)8.85
EY3.85%
EPS(NY)10.14
Fwd EY4.41%
FCF(TTM)6.79
FCFY2.96%
OCF(TTM)10.14
OCFY4.41%
SpS34.16
BVpS30.65
TBVpS28.92
PEG (NY)2.24
PEG (5Y)1.4
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.62% | ||
| ROE | 22.96% | ||
| ROCE | 25.53% | ||
| ROIC | 19.08% | ||
| ROICexc | 25.41% | ||
| ROICexgc | 27.09% | ||
| OM | 27.88% | ||
| PM (TTM) | 20.6% | ||
| GM | 82.2% | ||
| FCFM | 19.88% |
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 Turnover0.42
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0 | ||
| Debt/EBITDA | 0 | ||
| Cap/Depr | 122.14% | ||
| Cap/Sales | 9.79% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 82.65% | ||
| Profit Quality | 96.52% | ||
| Current Ratio | 1.2 | ||
| Quick Ratio | 1.2 | ||
| Altman-Z | 4.3 |
F-Score6
WACC8.91%
ROIC/WACC2.14
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)11.88%
EPS 3Y22.42%
EPS 5Y18.56%
EPS Q2Q%27.16%
EPS Next Y11.58%
EPS Next 2Y11.2%
EPS Next 3Y12.59%
EPS Next 5Y12.4%
Revenue 1Y (TTM)11.19%
Revenue growth 3Y21.29%
Revenue growth 5Y20.62%
Sales Q2Q%10.53%
Revenue Next Year8.6%
Revenue Next 2Y8.88%
Revenue Next 3Y9.43%
Revenue Next 5Y7.06%
EBIT growth 1Y-7.48%
EBIT growth 3Y35.74%
EBIT growth 5Y22.9%
EBIT Next Year44.61%
EBIT Next 3Y22.06%
EBIT Next 5Y15.57%
FCF growth 1Y51.53%
FCF growth 3Y20.33%
FCF growth 5Y20.7%
OCF growth 1Y44.1%
OCF growth 3Y18.68%
OCF growth 5Y18.94%