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 gets an excellent profitability rating and is at the same time showing great financial health properties. PAYC is valied quite expensively at the moment, while it does show a decent growth rate. With these ratings, PAYC could be worth investigating further 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.
PAYC had positive earnings in each of the past 5 years.
Each year in the past 5 years PAYC had a positive operating cash flow.
1.2 Ratios
PAYC has a better Return On Assets (8.62%) than 75.61% of its industry peers.
The Return On Equity of PAYC (22.96%) is better than 74.39% of its industry peers.
PAYC has a Return On Invested Capital of 19.08%. This is amongst the best in the industry. PAYC outperforms 86.59% 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 12.98%.
| 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
The Profit Margin of PAYC (20.60%) is better than 92.68% of its industry peers.
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.
In the last couple of years the Operating Margin of PAYC has grown nicely.
PAYC has a better Gross Margin (82.20%) 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 | 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.
Compared to 1 year ago, PAYC has less shares outstanding
PAYC has less shares outstanding than it did 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 4.72 indicates that PAYC is not in any danger for bankruptcy at the moment.
PAYC's Altman-Z score of 4.72 is amongst the best of the industry. PAYC outperforms 81.71% 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 | 4.72 |
ROIC/WACC2.09
WACC9.12%
2.3 Liquidity
A Current Ratio of 1.20 indicates that PAYC should not have too much problems paying its short term obligations.
PAYC has a Current ratio of 1.20. This is comparable to the rest of the industry: PAYC outperforms 43.90% of its industry peers.
A Quick Ratio of 1.20 indicates that PAYC should not have too much problems paying its short term obligations.
PAYC has a Quick ratio (1.20) which is comparable to the rest of the industry.
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 | 1.2 | ||
| Quick Ratio | 1.2 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 6.32% over the past year.
Measured over the past years, PAYC shows a quite strong growth in Earnings Per Share. The EPS has been growing by 18.56% on average per year.
PAYC shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 9.87%.
PAYC shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 20.62% yearly.
EPS 1Y (TTM)6.32%
EPS 3Y22.42%
EPS 5Y18.56%
EPS Q2Q%8.11%
Revenue 1Y (TTM)9.87%
Revenue growth 3Y21.29%
Revenue growth 5Y20.62%
Sales Q2Q%6.13%
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 10.16% on average per year.
Based on estimates for the next years, PAYC will show a quite strong growth in Revenue. The Revenue will grow by 8.20% on average per year.
EPS Next Y11.17%
EPS Next 2Y11.08%
EPS Next 3Y12.1%
EPS Next 5Y10.16%
Revenue Next Year8.54%
Revenue Next 2Y8.91%
Revenue Next 3Y9.48%
Revenue Next 5Y8.2%
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
With a Price/Earnings ratio of 30.59, PAYC can be considered very expensive at the moment.
The rest of the industry has a similar Price/Earnings ratio as PAYC.
PAYC's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 26.03.
With a Price/Forward Earnings ratio of 25.42, PAYC can be considered very expensive at the moment.
The rest of the industry has a similar Price/Forward Earnings ratio as PAYC.
PAYC is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 21.94, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.59 | ||
| Fwd PE | 25.42 |
4.2 Price Multiples
PAYC's Enterprise Value to EBITDA is on the same level as the industry average.
The rest of the industry has a similar Price/Free Cash Flow ratio as PAYC.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 39.11 | ||
| EV/EBITDA | 21.2 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates PAYC does not grow enough to justify the current Price/Earnings ratio.
The excellent profitability rating of PAYC may justify a higher PE ratio.
PAYC's earnings are expected to grow with 12.10% in the coming years. This may justify a more expensive valuation.
PEG (NY)2.74
PEG (5Y)1.65
EPS Next 2Y11.08%
EPS Next 3Y12.1%
5. Dividend
5.1 Amount
PAYC has a yearly dividend return of 0.58%, which is pretty low.
PAYC's Dividend Yield is a higher than the industry average which is at 1.98.
With a Dividend Yield of 0.58, PAYC pays less dividend than the S&P500 average, which is at 2.36.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.58% |
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 2Y11.08%
EPS Next 3Y12.1%
257.25
-3.44 (-1.32%)
Chartmill FA Rating
GICS SectorIndustrials
GICS IndustryGroupCommercial & Professional Services
GICS IndustryProfessional Services
Earnings (Last)
Earnings (Next)
Inst Owners87.3%
Inst Owner Change2.42%
Ins Owners5.12%
Ins Owner Change-0.18%
Market Cap14.88B
Analysts70.77
Price Target229.21 (-10.9%)
Short Float %3.46%
Short Ratio2.53
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.58% |
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)-0.12%
Min Revenue beat(2)-0.92%
Max Revenue beat(2)0.69%
Revenue beat(4)1
Avg Revenue beat(4)-0.71%
Min Revenue beat(4)-1.72%
Max Revenue beat(4)0.69%
Revenue beat(8)2
Avg Revenue beat(8)-0.94%
Revenue beat(12)4
Avg Revenue beat(12)-0.67%
Revenue beat(16)8
Avg Revenue beat(16)-0.19%
PT rev (1m)-1.29%
PT rev (3m)2.13%
EPS NQ rev (1m)0.29%
EPS NQ rev (3m)-0.35%
EPS NY rev (1m)2.84%
EPS NY rev (3m)3.11%
Revenue NQ rev (1m)-0.03%
Revenue NQ rev (3m)-0.51%
Revenue NY rev (1m)0.19%
Revenue NY rev (3m)-1.19%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 30.59 | ||
| Fwd PE | 25.42 | ||
| P/S | 7.78 | ||
| P/FCF | 39.11 | ||
| P/OCF | 26.21 | ||
| P/B | 8.67 | ||
| P/tB | 9.19 | ||
| EV/EBITDA | 21.2 |
EPS(TTM)8.41
EY3.27%
EPS(NY)10.12
Fwd EY3.93%
FCF(TTM)6.58
FCFY2.56%
OCF(TTM)9.81
OCFY3.82%
SpS33.08
BVpS29.68
TBVpS28.01
PEG (NY)2.74
PEG (5Y)1.65
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 | 4.72 |
F-Score6
WACC9.12%
ROIC/WACC2.09
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)6.32%
EPS 3Y22.42%
EPS 5Y18.56%
EPS Q2Q%8.11%
EPS Next Y11.17%
EPS Next 2Y11.08%
EPS Next 3Y12.1%
EPS Next 5Y10.16%
Revenue 1Y (TTM)9.87%
Revenue growth 3Y21.29%
Revenue growth 5Y20.62%
Sales Q2Q%6.13%
Revenue Next Year8.54%
Revenue Next 2Y8.91%
Revenue Next 3Y9.48%
Revenue Next 5Y8.2%
EBIT growth 1Y-7.48%
EBIT growth 3Y35.74%
EBIT growth 5Y22.9%
EBIT Next Year41.43%
EBIT Next 3Y21.31%
EBIT Next 5Y17.51%
FCF growth 1Y51.53%
FCF growth 3Y20.33%
FCF growth 5Y20.7%
OCF growth 1Y44.1%
OCF growth 3Y18.68%
OCF growth 5Y18.94%