Paycom Software, Inc. (PAYC) Stock Analysis

Why this analysis is different

• A sector-relative MoonshotScore — five pillars (business quality, financial safety, valuation, growth durability, momentum) re-ranked nightly against the full universe of US-listed common stocks.
• An AI Council read across up to eight perspectives — value, macro, quantitative, and momentum lenses — that shows where they disagree instead of averaging the tension away.
• Figures come straight from FMP and Yahoo Finance filings data. The AI writes the narrative around the numbers — it never edits the numbers.

Paycom Software, Inc. (PAYC) Technology Profile & Competitive Position

Paycom Software, Inc. delivers cloud-based human capital management (HCM) solutions, offering a comprehensive suite of applications for managing the entire employee lifecycle. Targeting small to mid-sized businesses in the U.S., Paycom distinguishes itself through integrated functionality and data analytics, streamlining HR processes and improving workforce management.

What Is the Investment Thesis for PAYC?

Paycom Software, Inc. presents a notable research candidate due to its strong growth trajectory in the HCM market. With a P/E ratio of 22.91 and a profit margin of 22.4%, Paycom demonstrates solid financial performance. The company's focus on small to mid-sized businesses provides a significant market opportunity, as these companies increasingly adopt cloud-based HCM solutions. Key growth catalysts include continued innovation in its HCM platform, expansion of its sales and marketing efforts, and strategic acquisitions to broaden its product offerings. However, potential risks include increasing competition in the HCM market and the ability to retain and attract top talent. The company's beta of 0.80 suggests lower volatility compared to the overall market.

Based on FMP financials and quantitative analysis

PAYC Key Highlights

Market capitalization of $9.81B, reflecting investor confidence in Paycom's growth potential.

• P/E ratio of 22.91, indicating a potentially undervalued stock compared to its earnings.
• Profit margin of 22.4%, showcasing efficient operations and profitability.
• Gross margin of 79.7%, highlighting the strong pricing power and value proposition of its HCM solutions.
• Dividend yield of 1.10%, providing a steady income stream for investors.

Who Are PAYC's Competitors?

PAYC is benchmarked below against 8 industry peers on price, market cap, and our AI MoonshotScore.

AI Score by Stock Expert AI · Price data: FMP / Yahoo Finance

What Are PAYC's Key Strengths?

Comprehensive suite of HCM applications.

• Cloud-based platform providing scalability and accessibility.
• Strong focus on small to mid-sized businesses.
• High customer satisfaction and retention rates.

What Are PAYC's Weaknesses?

Limited international presence.

• Reliance on subscription revenue.
• Potential for increased competition in the HCM market.
• Dependence on key personnel.

What Could Drive PAYC Stock Higher?

Launch of new HCM applications to address emerging HR needs.

• Expansion of sales and marketing efforts to attract new customers.
• Strategic acquisitions to broaden product offerings and market reach.
• Increasing adoption of cloud-based HCM solutions by small to mid-sized businesses.
• Focus on data analytics and insights to provide value-added services.

What Are the Key Risks for PAYC?

Insider selling — insiders were net sellers of roughly $1.4M recently.

• Economic downturn impacting business spending on HR technology.
• Cybersecurity threats and data breaches compromising customer data.
• Changes in government regulations impacting payroll and HR compliance.
• Increasing competition in the HCM market from established players and new entrants.
• Ability to retain and attract top talent in a competitive job market.

What Are the Growth Opportunities for PAYC?

• Expansion into new geographic markets: Paycom can expand its presence beyond the United States by targeting international markets with similar needs for cloud-based HCM solutions. This expansion could significantly increase its customer base and revenue potential, tapping into a global HCM market estimated to reach $30 billion by 2028.
• Development of new HCM applications: Paycom can continue to innovate and develop new HCM applications to address emerging HR needs, such as employee wellness programs and remote work management tools. By expanding its product offerings, Paycom can attract new customers and increase revenue from existing customers, solidifying its position as a leading HCM provider.
• Strategic acquisitions: Paycom can pursue strategic acquisitions of complementary businesses to broaden its product offerings and expand its market reach. Acquiring companies with expertise in areas such as benefits administration or talent analytics could enhance Paycom's HCM platform and provide a competitive advantage.
• Increased focus on data analytics: Paycom can leverage its vast data resources to provide more advanced analytics and insights to its customers. By offering data-driven solutions, Paycom can help businesses make better decisions about workforce management, improve employee engagement, and optimize HR processes. This value-added service can attract new customers and increase customer retention.
• Partnerships with other technology providers: Paycom can form partnerships with other technology providers to integrate its HCM platform with other business applications, such as CRM and ERP systems. These integrations can provide a more seamless experience for customers and enhance the value of Paycom's HCM solutions, driving adoption and growth.

What Are PAYC's Competitive Advantages?

• High switching costs due to the complexity of implementing and integrating HCM systems.
• Strong brand reputation and customer loyalty.
• Proprietary technology and intellectual property.
• Extensive data resources and analytics capabilities.
• Integrated suite of HCM applications providing a comprehensive solution.

What Does PAYC Do?

Founded in 1998 and headquartered in Oklahoma City, Paycom Software, Inc. has emerged as a leading provider of cloud-based human capital management (HCM) solutions. The company's mission is to simplify HR processes for small to mid-sized businesses through its comprehensive software-as-a-service (SaaS) platform. Paycom's HCM solution offers a suite of applications that cover the entire employment lifecycle, from recruitment and onboarding to payroll, talent management, and retirement. Paycom's key product offerings include talent acquisition tools such as applicant tracking and background checks, time and labor management solutions like time and attendance tracking and scheduling, payroll applications with tax management and expense management features, and talent management tools for performance management and compensation budgeting. The company's innovative solutions, such as 'Ask Here' for direct employee communication and 'Clue' for workforce vaccination tracking, demonstrate its commitment to addressing evolving HR needs. By providing a unified platform with integrated data analytics, Paycom enables businesses to streamline HR operations, improve employee engagement, and make data-driven decisions.

What Products and Services Does PAYC Offer?

• Provides cloud-based human capital management (HCM) solutions.
• Offers software-as-a-service (SaaS) for small to mid-sized companies.
• Manages the employment life cycle from recruitment to retirement.
• Provides applications for talent acquisition, time and labor management, and payroll.
• Offers talent management applications, including performance management and compensation budgeting.
• Provides data analytics and reporting tools for workforce management.
• Offers mobile applications for managers and employees.

How Does PAYC Make Money?

• Generates revenue through subscription fees for its HCM software.
• Offers tiered pricing plans based on the number of employees and features used.
• Provides additional services, such as implementation and training, for a fee.
• Focuses on recurring revenue through long-term customer contracts.

What Industry Does PAYC Operate In?

Paycom operates in the rapidly growing human capital management (HCM) market. The increasing adoption of cloud-based solutions and the need for integrated HR platforms are driving market growth. The competitive landscape includes companies like Dayforce Inc (DAY), Pegasystems Inc (PEGA), and Manhattan Associates, Inc (MANH). Paycom differentiates itself through its focus on small to mid-sized businesses and its comprehensive suite of HCM applications. The industry is expected to continue growing as businesses seek to streamline HR processes and improve employee engagement.

Who Are PAYC's Key Customers?

• Small to mid-sized businesses in the United States.
• Companies with 50 to 5,000 employees.
• Businesses across various industries, including healthcare, retail, and manufacturing.
• Organizations seeking to streamline HR processes and improve employee engagement.

Paycom Software, Inc. (PAYC) Valuation Context

Valued at $9.81B, PAYC is classified as a mid-cap stock. Analyst price targets span from $130.00 to $270.00, with a consensus of $201.18. At the current price of $217.60, that implies roughly 8% downside from the consensus target. Relative to its peer group, PAYC's quantitative score of 90/100 is roughly in line with the peer average of 80/100.

PAYC Revenue & Earnings Trend

In Q2 FY2026, PAYC generated $531.2M in top-line revenue, marking a sequential decrease of 7.1%. The company recorded net income of $107.4M, with diluted EPS of $2.34. Quarter-over-quarter revenue has been mixed, typical for a mid-cap company operating in Technology. Across the four most recent quarters, PAYC averaged $2.35 in diluted EPS.

Company Profile

Paycom Software, Inc. operates in the Software - Application industry within the Technology sector. It is headquartered in Oklahoma City, US. The company is led by CEO Chad R. Richison. PAYC has traded publicly since 2014.

Return on equity for Paycom Software, Inc. stands at 40.4%, a gauge of how efficiently it converts shareholder capital into profit. Return on assets is 9.4%, showing how much profit it generates from its asset base. PAYC trades at a trailing price-to-earnings ratio of 22.91, below the Technology sector average of ~32.70x. Its free cash flow yield is 7.9%, a gauge of the cash the business throws off relative to its market value. A current ratio of 1.07 indicates the company holds enough short-term assets to cover its near-term obligations. Its earnings yield is 5.0%, the inverse of the P/E and a quick read on earnings relative to price.

Paycom Software, Inc.'s Piotroski F-Score is 6/9, a 9-point checklist of profitability, leverage and efficiency — a middling fundamental profile. Its Altman Z-Score of 2.86 places it in the grey zone, a middle ground that warrants monitoring.

Paycom Software, Inc. has beaten Wall Street's EPS estimate in 6 of its last 8 reported quarters — a consistent record of delivering on expectations. Reported results have landed about 8.4% above estimates on average.

Over the past six months, Paycom Software, Inc. insiders filed 16 SEC Form 4 transactions — 8 sales and 8 purchases. On net that is roughly 3K shares acquired (about $1.4M) — insiders putting money in tends to read as conviction.

PAYC Financials

PAYC Latest News

PAYC Analyst Consensus

PAYC MoonshotScore

Paycom Software, Inc. Technology Stock: Key Questions Answered

Disclaimer: This content is for informational purposes only and does not constitute investment advice. Always do your own research and consult a financial advisor.

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