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Paycom
(NYSE:PAYC)
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Rating:71Outperform
Price Target:
$239.00
▲(64.43% Upside)
Action:Reiterated
Date:08/07/26
PAYC scores well primarily due to strong earnings-call-driven momentum (raised outlook, record EBITDA margin guidance, and robust free cash flow expectations) and a powerful uptrend in the stock price. The score is held back by elevated balance-sheet risk from higher leverage versus history and stretched technical conditions (RSI/Stoch), with valuation appearing reasonable but not deeply discounted.
Positive Factors
Strong profitability and cash generation
Paycom’s high gross and operating profitability, combined with substantial operating cash flow and free cash flow, supports reinvestment, product development and shareholder returns while providing resilience in a competitive SaaS market.
Negative Factors
Revenue growth has materially slowed
The sharp deceleration raises questions about market penetration, competitive pressure and the pace of new-module adoption. Even with improved margins, slower top-line expansion can constrain Paycom’s long-term growth and operating leverage.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong profitability and cash generation
Paycom’s high gross and operating profitability, combined with substantial operating cash flow and free cash flow, supports reinvestment, product development and shareholder returns while providing resilience in a competitive SaaS market.
Read all positive factors
Paycom Key Performance Indicators (KPIs)
Any
Revenue by Type
Breaks down revenue by different service offerings, highlighting which areas are driving growth and where there might be opportunities or challenges.
Breaks down revenue by different service offerings, highlighting which areas are driving growth and where there might be opportunities or challenges.
Data provided by:
The Fly
The FlyPaycom (PAYC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$9.55B
Dividend Yield0.68%
Average Volume (3M)933.56K
Price to Earnings (P/E)23.6
Beta (1Y)1.08
Revenue Growth9.23%
EPS Growth27.04%
CountryUS
Employees5,770
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)9.43
Shares Outstanding44,285,282
10 Day Avg. Volume620,887
30 Day Avg. Volume933,560
Financial Highlights & Ratios
PEG Ratio-2.19
Price to Book (P/B)5.14
Price to Sales (P/S)4.33
P/FCF Ratio21.79
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$210.79Price Target Upside45.02% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering16
EPS Forecast (FY)12.02
Revenue Forecast (FY)$2.21B
Paycom Business Overview & Revenue Model
Company Description
Paycom Software, Inc., established in 1998 and headquartered in Oklahoma City, Oklahoma, provides a comprehensive, cloud-based human capital management (HCM) platform. This software-as-a-service (SaaS) solution is specifically tailored for small t...
How the Company Makes Money
Paycom primarily makes money by selling subscriptions to its cloud-based HCM software platform, typically under recurring SaaS arrangements where clients pay fees to access and use Paycom’s applications. Revenue is largely driven by ongoing custom...
Paycom Earnings Call Summary
Earnings Call Date:Aug 05, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 03, 2026
Earnings Call Sentiment Positive
The call conveyed strong operational and financial momentum: double-digit top-line growth in the quarter, robust margin expansion (320 bps YoY to 44.2%), raised full-year adjusted EBITDA guidance (record margin at midpoint), and substantial free cash flow and shareholder returns (~$1.4B repurchased YTD). Product and AI initiatives (Project Arc, IWant, Asset Management, Career & Succession) signal durable product-led growth and longer-term TAM expansion. Primary risks noted were a moderation in full-year revenue growth relative to Q2, increased use of the revolving credit facility to fund buybacks (cash down to $198M), short-term limited contribution from very recent product launches, and sensitivity to interest rate assumptions. Overall, positives around profitability, cash generation, product innovation, and capital returns materially outweighed the identified headwinds.Positive Updates
Revenue Growth
Total revenue of $531 million in Q2 2026, up 10% year-over-year; recurring and other revenue of $505 million, up 11% year-over-year.
Negative Updates
Deceleration Implied in Full-Year Guidance
Raised full-year revenue guidance to $2.197B–$2.212B (7%–8% growth), which implies a deceleration versus the Q2 10% year-over-year growth rate and suggests more moderate revenue pacing in H2 2026.
Read all updates
Q2-2026 Updates
Positive
Negative
Revenue Growth
Total revenue of $531 million in Q2 2026, up 10% year-over-year; recurring and other revenue of $505 million, up 11% year-over-year.
Read all positive updates
Company Guidance
Paycom raised its 2026 outlook, now expecting total revenues of $2.197–2.212 billion (up 7%–8% year‑over‑year) with recurring and other revenue up 8%–9%; the outlook includes roughly $105 million of interest on funds held for clients (assuming current rates). Full‑year adjusted EBITDA is guided to $1.007–1.022 billion, implying a record adjusted EBITDA margin of about 46% at the midpoint, and management expects free cash flow to exceed $650 million. Additional modeling assumptions and capital allocation metrics disclosed: CapEx around 6% of revenue, GAAP tax rate ~29%, non‑GAAP tax rate ~27%, stock‑based comp ~3% of revenue; the company ended Q2 with ~44 million shares outstanding, repurchased ~2.6 million shares in Q2 (≈6% of shares) for $346 million and nearly 11 million shares year‑to‑date returning ~$1.4 billion, has $1.66 billion remaining on its buyback authorization, paid ~$18 million of dividends in Q2 and the Board approved a $0.375 per‑share quarterly dividend.Paycom Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
44
Neutral
Cash Flow
72
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.14B | 2.05B | 1.88B | 1.69B | 1.38B | 1.06B |
| Gross Profit | 1.72B | 1.61B | 1.55B | 1.42B | 1.16B | 893.64M |
| EBITDA | 898.30M | 799.10M | 798.30M | 588.20M | 484.80M | 323.18M |
| Net Income | 487.60M | 453.40M | 502.00M | 340.79M | 281.39M | 195.96M |
Balance Sheet | ||||||
| Total Assets | 5.20B | 7.60B | 5.86B | 4.20B | 3.90B | 3.22B |
| Cash, Cash Equivalents and Short-Term Investments | 198.00M | 370.00M | 402.00M | 294.00M | 400.73M | 277.98M |
| Total Debt | 982.80M | 152.20M | 83.40M | 75.90M | 29.00M | 29.16M |
| Total Liabilities | 4.63B | 5.87B | 4.28B | 2.89B | 2.72B | 2.32B |
| Stockholders Equity | 571.50M | 1.73B | 1.58B | 1.30B | 1.18B | 893.71M |
Cash Flow | ||||||
| Free Cash Flow | 754.50M | 408.00M | 336.60M | 288.21M | 228.31M | 193.17M |
| Operating Cash Flow | 1.01B | 678.90M | 533.90M | 485.04M | 365.10M | 319.36M |
| Investing Cash Flow | -131.30M | -611.20M | -22.20M | -196.71M | -23.29M | -257.67M |
| Financing Cash Flow | -2.44B | 1.02B | 1.11B | -274.66M | 254.59M | 165.72M |
Paycom Technical Analysis
Positive
145.35
Price Trends
155.19
Positive
142.58
Positive
145.11
Positive
Market Momentum
19.78
Negative
73.14
Negative
74.66
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PAYC, the sentiment is Positive. The current price of 145.35 is below the 20-day moving average (MA) of 184.45, below the 50-day MA of 155.19, and above the 200-day MA of 145.11, indicating a bullish trend. The MACD of 19.78 indicates Negative momentum. The RSI at 73.14 is Negative, neither overbought nor oversold. The STOCH value of 74.66 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PAYC.
Paycom Risk Analysis
Paycom disclosed 35 risk factors in its most recent earnings report. Paycom reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Paycom Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $7.82B | 29.92 | 23.44% | ― | 11.04% | 22.52% | |
71 Outperform | $9.55B | 23.56 | 40.43% | 1.03% | 9.23% | 27.04% | |
69 Neutral | $1.89B | -138.99 | 25.17% | ― | 15.79% | -125.94% | |
66 Neutral | $5.92B | 86.91 | 56.13% | ― | 15.47% | -13.79% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
55 Neutral | $3.41B | -23.49 | -12.16% | ― | 31.25% | 56.23% |
* Technology Sector Average
PAYC
Paycom
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Paycom Corporate Events
Business Operations and StrategyDividends
Paycom Declares Regular Quarterly Cash Dividend to Shareholders
Positive
Aug 3, 2026
On August 3, 2026, Paycom Software, Inc. announced that its board of directors declared a regular quarterly cash dividend of $0.375 per share of common stock. The dividend is scheduled to be paid on September 8, 2026, to shareholders of record as ...
Business Operations and StrategyExecutive/Board Changes
Paycom Adds Former Executives to Expanded Board
Positive
Jul 9, 2026
On July 8, 2026, Paycom Software, Inc. expanded its board of directors from six to eight members and appointed former longtime chief financial officer Craig E. Boelte as a Class I director and former chief information officer and early employee Wi...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.