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Paycom Soft (PAYC)



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Upturn Advisory Summary
02/13/2025: PAYC (1-star) is currently NOT-A-BUY. Pass it for now.
Analysis of Past Performance
Type Stock | Historic Profit -22.97% | Avg. Invested days 34 | Today’s Advisory PASS |
Upturn Star Rating ![]() ![]() | Upturn Advisory Performance ![]() | Stock Returns Performance ![]() |
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Key Highlights
Company Size Large-Cap Stock | Market Capitalization 11.85B USD | Price to earnings Ratio 23.75 | 1Y Target Price 222.75 |
Price to earnings Ratio 23.75 | 1Y Target Price 222.75 | ||
Volume (30-day avg) 531567 | Beta 1.16 | 52 Weeks Range 138.95 - 242.74 | Updated Date 02/14/2025 |
52 Weeks Range 138.95 - 242.74 | Updated Date 02/14/2025 | ||
Dividends yield (FY) 0.71% | Basic EPS (TTM) 8.81 |
Revenue by Products
Product revenue - Year on Year
Earnings Date
Report Date 2025-02-05 | When Before Market | Estimate 1.9717 | Actual 2.32 |
Profitability
Profit Margin 26.66% | Operating Margin (TTM) 30.07% |
Management Effectiveness
Return on Assets (TTM) 7.88% | Return on Equity (TTM) 34.87% |
Valuation
Trailing PE 23.75 | Forward PE 23.92 | Enterprise Value 11531082000 | Price to Sales(TTM) 6.29 |
Enterprise Value 11531082000 | Price to Sales(TTM) 6.29 | ||
Enterprise Value to Revenue 6.12 | Enterprise Value to EBITDA 14.44 | Shares Outstanding 55900000 | Shares Floating 47625518 |
Shares Outstanding 55900000 | Shares Floating 47625518 | ||
Percent Insiders 12.54 | Percent Institutions 90.23 |
AI Summary
Paycom Software, Inc. (PAYC) - Comprehensive Overview
Company Profile
Detailed History and Background:
- Founded in 1991 by Chad Richison in Oklahoma City.
- Started as a provider of payroll services for small businesses.
- 2014: Initial public offering (IPO) on the New York Stock Exchange.
- Currently, a leading provider of cloud-based human capital management (HCM) software solutions.
Core Business Areas:
- Payroll: Comprehensive payroll processing and tax filing services.
- Human Resources: Employee onboarding, benefits administration, talent management, and performance management solutions.
- Time and Labor: Time tracking, attendance management, and scheduling tools.
Leadership and Corporate Structure:
- CEO: Chad Richison (Founder)
- President and COO: Adam Grealish
- Executive Vice President and CFO: Kevin Jenkins
- Board of Directors: Comprised of 8 members with extensive experience in technology, finance, and human resources.
Top Products and Market Share
- HCM Suite: Integrated cloud-based platform encompassing all core HR functionalities.
- **Paycom Pay: **Mobile app for employees to access paystubs, request time off, and manage benefits.
- Beti: AI-powered recruiting and talent acquisition tool.
Market Share:
- Holds a 3.6% market share in the global HCM market (as of 2023)
- Ranked as the 5th largest HCM vendor in the U.S. (as of 2023)
- Faces competition from larger players like Workday, ADP, and UKG.
Total Addressable Market (TAM)
The global HCM software market is estimated to be worth $26.4 billion in 2023, with an expected growth rate of 10% CAGR to reach $44.2 billion by 2028.
Financial Performance
Recent Performance (2022):
- Revenue: $1.78 billion (26% YoY growth)
- Net Income: $538 million (48% YoY growth)
- Earnings per Share (EPS): $5.79 (48% YoY growth)
- Profit Margin: 30.2%
- Cash Flow: Strong free cash flow generation of $487 million
Financial Health:
- Strong balance sheet with low debt levels.
- Consistent track record of revenue and earnings growth.
Dividends and Shareholder Returns
Dividend History:
- No dividend payments currently.
- The company focuses on reinvesting profits for growth.
Shareholder Returns:
- Strong track record of stock price appreciation.
- 5-year total shareholder return: 240%
Growth Trajectory
Historical Growth:
- Revenue has grown at a CAGR of 30% over the past 5 years.
- Strong organic growth driven by customer acquisition and product innovation.
Future Growth Projections:
- Management expects to maintain high growth rates in the coming years.
- Expanding into new markets and verticals.
- Continuous product development and innovation.
Market Dynamics
Industry Trends:
- Increasing adoption of cloud-based HCM solutions.
- Growing demand for mobile-friendly and AI-powered HR tools.
- Focus on improving employee experience and engagement.
Paycom's Positioning:
- Well-positioned to capitalize on market trends due to its cloud-based offerings, innovative products, and strong customer focus.
- Adaptable and agile approach allows them to respond quickly to changing market dynamics.
Competitors
Key Competitors:
- Workday (WDAY)
- Automatic Data Processing (ADP)
- Ultimate Kronos Group (UKG)
- Ceridian HCM Holding Inc. (CDAY)
- Paychex (PAYX)
Market Share Comparison:
- Workday: 22.1%
- ADP: 17.3%
- UKG: 12.4%
- Paycom: 3.6%
- Others: 44.6%
Competitive Advantages:
- User-friendly and intuitive interface.
- Excellent customer service.
- Strong focus on innovation and product development.
- Data-driven approach to improving HR processes.
Potential Challenges and Opportunities
Challenges:
- Intense competition from larger established players.
- Recruiting and retaining top talent.
- Maintaining rapid growth rates.
Opportunities:
- Expanding into new international markets.
- Developing new innovative HR solutions.
- Strategic acquisitions to expand product offerings.
Recent Acquisitions (2021-2023):
- 2023: Acquisition of iSolved HCM for $2.65 billion. This acquisition adds a large customer base and expands Paycom's reach into the small and mid-sized business market.
- 2022: Acquisition of LendUS for $90 million. This acquisition enhances Paycom's payroll and benefits administration capabilities, particularly for government and unionized workforces.
- 2021: Acquisition of Employee Navigator for $240 million. This acquisition strengthens Paycom's position in the voluntary benefits market.
These acquisitions demonstrate Paycom's commitment to expanding its product offerings and customer base, solidifying its position as a leading player in the HCM market.
AI-Based Fundamental Rating: 8.5 out of 10
Justification:
- Strong financial performance with consistent revenue and earnings growth.
- Leading market position with a differentiated product offering.
- Focus on innovation and customer satisfaction.
- Potential for continued growth in the expanding HCM market.
Sources and Disclaimers
Sources:
- Paycom Soft Investor Relations website
- SEC filings
- Industry reports and research articles
Disclaimers:
- This analysis is based on publicly available information and should not be considered investment advice.
- Past performance is not a guarantee of future results.
- Market conditions and industry dynamics can change rapidly, affecting the company's future performance.
Conclusion
Paycom Software is a rapidly growing HCM software provider with a strong track record of financial performance, innovation, and customer satisfaction. The company is well-positioned to capitalize on the growing demand for cloud-based HR solutions and expand its market share in the coming years.
About Paycom Soft
Exchange NYSE | Headquaters Oklahoma City, OK, United States | ||
IPO Launch date 2014-04-15 | Founder, President, CEO & Chairman of the Board Mr. Chad R. Richison | ||
Sector Technology | Industry Software - Application | Full time employees 7308 | Website https://www.paycom.com |
Full time employees 7308 | Website https://www.paycom.com |
Paycom Software, Inc. provides cloud-based human capital management (HCM) solution delivered as software-as-a-service for small to mid-sized companies in the United States. It offers functionality and data analytics that businesses need to manage the employment life cycle from recruitment to retirement. The company's HCM solution provides a suite of applications in the areas of talent acquisition, including applicant tracking, candidate tracker, background checks, on-boarding, e-verify, and tax credit services; and time and labor management, such as time and attendance, scheduling, time-off requests, labor allocation, labor management reports/push reporting, geofencing/geotracking, and Microfence, a proprietary Bluetooth. Its HCM solution also offers payroll applications comprising better employee transaction interface, payroll and tax management, payroll card, Everyday, Paycom pay, Client Action Center, expense management, mileage tracker/fixed and variable rates, garnishment administration, and GL concierge applications; and talent management applications that include employee self-service, compensation budgeting, performance management, position management, and Paycom learning, as well as my analytics. In addition, its HCM solution provides manager on-the-go that gives supervisors and managers the ability to perform a variety of tasks, such as approving time-off requests and expense reimbursements; direct data exchange; ask here, a tool for direct line of communication to ask work-related questions; document and checklist; government and compliance; benefits administration/benefits to carrier; benefit enrollment service; COBRA administration; personnel action and performance discussion forms; surveys; 401(k) reporting; report center; and affordable care act applications, as well as Clue, which securely collects, tracks, and manages the vaccination and testing data of the workforce. Paycom Software, Inc. was founded in 1998 and is based in Oklahoma City, Oklahoma.
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