Latest news with #PAYC
Business Insider
24-05-2025
- Business
- Business Insider
Jefferies Sticks to Their Hold Rating for Paycom (PAYC)
Jefferies analyst Samad Samana maintained a Hold rating on Paycom (PAYC – Research Report) today and set a price target of $250.00. The company's shares closed today at $257.90. Confident Investing Starts Here: According to TipRanks, Samana is a 4-star analyst with an average return of 4.6% and a 49.64% success rate. Samana covers the Technology sector, focusing on stocks such as HubSpot, ServiceNow, and Shopify. In addition to Jefferies, Paycom also received a Hold from Barclays's Raimo Lenschow in a report issued on May 8. However, on May 12, KeyBanc maintained a Buy rating on Paycom (NYSE: PAYC). Based on Paycom's latest earnings release for the quarter ending March 31, the company reported a quarterly revenue of $530.5 million and a net profit of $139.4 million. In comparison, last year the company earned a revenue of $499.88 million and had a net profit of $247.19 million Based on the recent corporate insider activity of 177 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of PAYC in relation to earlier this year. Most recently, in February 2025, Watts J C, a Director at PAYC sold 500.00 shares for a total of $109,105.00.
Yahoo
26-04-2025
- Business
- Yahoo
A Look At The Intrinsic Value Of Paycom Software, Inc. (NYSE:PAYC)
Paycom Software's estimated fair value is US$242 based on 2 Stage Free Cash Flow to Equity Paycom Software's US$228 share price indicates it is trading at similar levels as its fair value estimate Analyst price target for PAYC is US$222 which is 8.2% below our fair value estimate In this article we are going to estimate the intrinsic value of Paycom Software, Inc. (NYSE:PAYC) by projecting its future cash flows and then discounting them to today's value. Our analysis will employ the Discounted Cash Flow (DCF) model. Don't get put off by the jargon, the math behind it is actually quite straightforward. We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model. We've discovered 2 warning signs about Paycom Software. View them for free. We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, and so the sum of these future cash flows is then discounted to today's value: 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF ($, Millions) US$392.8m US$445.7m US$485.6m US$492.0m US$540.0m US$566.7m US$591.0m US$613.6m US$635.1m US$655.9m Growth Rate Estimate Source Analyst x10 Analyst x10 Analyst x3 Analyst x1 Analyst x1 Est @ 4.95% Est @ 4.29% Est @ 3.83% Est @ 3.50% Est @ 3.28% Present Value ($, Millions) Discounted @ 6.4% US$369 US$394 US$403 US$384 US$396 US$390 US$382 US$373 US$363 US$352 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$3.8b After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.8%. We discount the terminal cash flows to today's value at a cost of equity of 6.4%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = US$656m× (1 + 2.8%) ÷ (6.4%– 2.8%) = US$18b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$18b÷ ( 1 + 6.4%)10= US$9.9b The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is US$14b. In the final step we divide the equity value by the number of shares outstanding. Compared to the current share price of US$228, the company appears about fair value at a 5.9% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out. The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Paycom Software as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 6.4%, which is based on a levered beta of 0.846. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. See our latest analysis for Paycom Software Strength Earnings growth over the past year exceeded the industry. Currently debt free. Weakness Dividend is low compared to the top 25% of dividend payers in the Professional Services market. Opportunity Annual earnings are forecast to grow for the next 3 years. Current share price is below our estimate of fair value. Threat Annual earnings are forecast to grow slower than the American market. Whilst important, the DCF calculation shouldn't be the only metric you look at when researching a company. DCF models are not the be-all and end-all of investment valuation. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. For Paycom Software, we've put together three further items you should look at: Risks: Case in point, we've spotted 2 warning signs for Paycom Software you should be aware of. Future Earnings: How does PAYC's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! PS. Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Yahoo
24-02-2025
- Business
- Yahoo
Paycom Software Full Year 2024 Earnings: EPS Beats Expectations
Revenue: US$1.88b (up 11% from FY 2023). Net income: US$502.0m (up 47% from FY 2023). Profit margin: 27% (up from 20% in FY 2023). EPS: US$8.93 (up from US$5.91 in FY 2023). All figures shown in the chart above are for the trailing 12 month (TTM) period Revenue was in line with analyst estimates. Earnings per share (EPS) surpassed analyst estimates by 4.8%. In the last 12 months, the only revenue segment was Internet Software & Services contributing US$1.88b. The largest operating expense was Sales & Marketing costs, amounting to US$434.4m (39% of total expenses). Explore how PAYC's revenue and expenses shape its earnings. Looking ahead, revenue is forecast to grow 7.7% p.a. on average during the next 3 years, compared to a 6.6% growth forecast for the Professional Services industry in the US. Performance of the American Professional Services industry. The company's shares are up 1.8% from a week ago. It is worth noting though that we have found 1 warning sign for Paycom Software that you need to take into consideration. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Yahoo
13-02-2025
- Business
- Yahoo
Paycom Software Inc (PAYC) Q4 2024 Earnings Call Highlights: Strong Revenue Growth Amid ...
Full Year Revenue: $1.88 billion, 11% organic growth compared to 2023. Fourth Quarter Revenue: $494 million, 14% growth year-over-year. Full Year Recurring and Other Revenue: $1.76 billion, up 11% from 2023. Interest on Funds Held for Clients: $125 million for the full year, up 16% year-over-year; $29 million for the fourth quarter, up 2% year-over-year. Full Year GAAP Net Income: $502 million or $8.92 per diluted share. Fourth Quarter GAAP Net Income: $114 million or $2.02 per diluted share. Full Year Non-GAAP Net Income: $462 million or $8.21 per diluted share. Fourth Quarter Non-GAAP Net Income: $130 million or $2.32 per diluted share. Full Year Adjusted EBITDA: $775 million, 41.2% margin. Fourth Quarter Adjusted EBITDA: $215 million, 43.5% margin, up 290 basis points year-over-year. Cash Flow from Operations: $534 million, 28% margin for 2024. Free Cash Flow: $337 million, up 17% year-over-year, 18% margin. CapEx: $197 million, approximately 10% of total revenues for 2024. Share Repurchase: Over 900,000 shares repurchased for $145 million in 2024. Cash and Cash Equivalents: $402 million, 0 debt at year-end 2024. Client Growth: Approximately 37,500 clients, 2% growth year-over-year. Employee Records: 7 million, up 3% year-over-year. Annual Revenue Retention Rate: 90%, consistent with 2023. Warning! GuruFocus has detected 1 Warning Sign with PAYC. Release Date: February 12, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Paycom Software Inc (NYSE:PAYC) achieved strong momentum in 2024, driven by focused execution, organic sales growth, and operational efficiency gains. The company reported a 14% year-over-year increase in fourth-quarter revenue, with total revenue reaching $494 million. Paycom's automated solutions, such as Beti and GONE, have significantly improved client ROI and operational efficiency, with some clients reducing payroll processing time by 85%. The company maintained a high annual revenue retention rate of 90% in 2024, consistent with the previous year. Paycom opened three new sales offices in January 2025, indicating strong sales growth and expansion potential. The company's client growth rate was relatively low at 2% compared to 2023, indicating potential challenges in acquiring new clients. Interest on funds held for clients is expected to decrease by 12% year-over-year in 2025, impacting overall revenue growth. Paycom's guidance for 2025 indicates a slowdown in revenue growth, with an expected increase of approximately 8% year-over-year at the midpoint. The transition to an annual revenue and adjusted EBITDA guidance framework may reduce transparency for investors accustomed to quarterly updates. The company's effective income tax rate is anticipated to increase to approximately 29% on a GAAP basis in 2025, up from 23% in 2024. Q: What drove the decision to transition from quarterly to annual guidance, given Paycom's predictability? A: Bob Foster, the new CFO, explained that the shift aligns with Paycom's long-term focus and investment strategy. The annual guidance better reflects how the company operates, with strong guidance and high EBITDA margins indicating confidence in their business model. Q: Can you elaborate on the 9% recurring revenue growth guidance and the macroeconomic assumptions behind it? A: Chad Richison, CEO, stated that the 9% growth is based on onboarding new business clients at higher revenue rates, consistent with past practices. Craig Boelte, CFO, added that the guidance does not factor in macroeconomic impacts, either positive or negative. Q: How does Paycom plan to balance gross margin improvements with investments in sales, marketing, R&D, and G&A? A: Chad Richison highlighted that sales and marketing have performed well, with record sales months. The focus is on larger clients, which has led to strong growth. Craig Boelte noted that new building costs impacted margins, but efficiencies are being sought across all areas. Q: What is the expected impact of the new sales offices on revenue and staffing? A: Chad Richison explained that it takes about 24 months for new offices to be fully staffed and operational. These offices will contribute to revenue in a smaller capacity initially, with a more significant impact expected in 2026 and beyond. Q: How does Paycom view the competitive environment, especially with recent industry consolidations? A: Chad Richison stated that the competitive environment remains unchanged, with competition benefiting clients. Paycom's focus on differentiation through automation and client value remains strong, and they do not see recent consolidations affecting their strategy. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
Yahoo
29-01-2025
- Business
- Yahoo
Are Robust Financials Driving The Recent Rally In Paycom Software, Inc.'s (NYSE:PAYC) Stock?
Paycom Software (NYSE:PAYC) has had a great run on the share market with its stock up by a significant 24% over the last three months. Given that the market rewards strong financials in the long-term, we wonder if that is the case in this instance. Specifically, we decided to study Paycom Software's ROE in this article. Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital. In other words, it is a profitability ratio which measures the rate of return on the capital provided by the company's shareholders. Check out our latest analysis for Paycom Software The formula for return on equity is: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for Paycom Software is: 32% = US$470m ÷ US$1.5b (Based on the trailing twelve months to September 2024). The 'return' is the profit over the last twelve months. That means that for every $1 worth of shareholders' equity, the company generated $0.32 in profit. Thus far, we have learned that ROE measures how efficiently a company is generating its profits. We now need to evaluate how much profit the company reinvests or "retains" for future growth which then gives us an idea about the growth potential of the company. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics. Firstly, we acknowledge that Paycom Software has a significantly high ROE. Additionally, the company's ROE is higher compared to the industry average of 20% which is quite remarkable. As a result, Paycom Software's exceptional 24% net income growth seen over the past five years, doesn't come as a surprise. Next, on comparing with the industry net income growth, we found that Paycom Software's growth is quite high when compared to the industry average growth of 11% in the same period, which is great to see. The basis for attaching value to a company is, to a great extent, tied to its earnings growth. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. Doing so will help them establish if the stock's future looks promising or ominous. What is PAYC worth today? The intrinsic value infographic in our free research report helps visualize whether PAYC is currently mispriced by the market. Paycom Software's ' three-year median payout ratio is on the lower side at 18% implying that it is retaining a higher percentage (82%) of its profits. So it seems like the management is reinvesting profits heavily to grow its business and this reflects in its earnings growth number. While Paycom Software has seen growth in its earnings, it only recently started to pay a dividend. It is most likely that the company decided to impress new and existing shareholders with a dividend. Upon studying the latest analysts' consensus data, we found that the company is expected to keep paying out approximately 16% of its profits over the next three years. Still, forecasts suggest that Paycom Software's future ROE will drop to 22% even though the the company's payout ratio is not expected to change by much. On the whole, we feel that Paycom Software's performance has been quite good. Specifically, we like that the company is reinvesting a huge chunk of its profits at a high rate of return. This of course has caused the company to see substantial growth in its earnings. With that said, the latest industry analyst forecasts reveal that the company's earnings growth is expected to slow down. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
