Paycom Software, Inc.

PAYC

Services-Prepackaged Software

Mkt Cap

$9.434B

PE

20.13

Debt

Cash

$2.99B

EV

FCF

$287.9M

Market Cap

$9.434B

P/E Ratio

20.13

Debt

Cash

$2.99B

EV

FCF

$287.9M

Charts data: {"Earnings":[{"time":"2014-12-30","value":5663000},{"time":"2015-12-30","value":20675000},{"time":"2016-12-30","value":43507000},{"time":"2017-12-30","value":66636000},{"time":"2018-12-30","value":136906000},{"time":"2019-12-30","value":180495000},{"time":"2020-12-30","value":143453000},{"time":"2021-12-30","value":195960000},{"time":"2022-12-30","value":281389000},{"time":"2023-12-30","value":340788000}],"Sales":[{"time":"2014-12-30","value":150929000},{"time":"2015-12-30","value":224653000},{"time":"2016-12-30","value":329141000},{"time":"2017-12-30","value":433047000},{"time":"2018-12-30","value":566336000},{"time":"2019-12-30","value":737671000},{"time":"2020-12-30","value":841434000},{"time":"2021-12-30","value":1055524000},{"time":"2022-12-30","value":1375218000},{"time":"2023-12-30","value":1693674000}],"Net Margins":[{"time":"2014-12-30","value":0.037520953560945876},{"time":"2015-12-30","value":0.09203082086595772},{"time":"2016-12-30","value":0.13218347152132368},{"time":"2017-12-30","value":0.15387706184317176},{"time":"2018-12-30","value":0.24173988586280937},{"time":"2019-12-30","value":0.24468224994611418},{"time":"2020-12-30","value":0.17048633642091954},{"time":"2021-12-30","value":0.1856518658031461},{"time":"2022-12-30","value":0.20461410481829062},{"time":"2023-12-30","value":0.20121227579805795}],"Assets":[{"time":"2014-12-30","value":798942000},{"time":"2015-12-30","value":876773000},{"time":"2016-12-30","value":1078613000},{"time":"2017-12-30","value":1355164000},{"time":"2018-12-30","value":1521926000},{"time":"2019-12-30","value":2486917000},{"time":"2020-12-30","value":2607912000},{"time":"2021-12-30","value":3215145000},{"time":"2022-12-30","value":3902513000},{"time":"2023-12-30","value":4197539000}],"Stockholders Equity":[{"time":"2014-12-30","value":74138000},{"time":"2015-12-30","value":98314000},{"time":"2016-12-30","value":116527000},{"time":"2017-12-30","value":135402000},{"time":"2018-12-30","value":334753000},{"time":"2019-12-30","value":526628000},{"time":"2020-12-30","value":655643000},{"time":"2021-12-30","value":893714000},{"time":"2022-12-30","value":1182607000},{"time":"2023-12-30","value":1303036000}],"ROE":[{"time":"2014-12-30","value":0.07638458010736734},{"time":"2015-12-30","value":0.2102955835384584},{"time":"2016-12-30","value":0.37336411303818},{"time":"2017-12-30","value":0.4921345327247751},{"time":"2018-12-30","value":0.4089761704898836},{"time":"2019-12-30","value":0.3427371882999005},{"time":"2020-12-30","value":0.21879742481807934},{"time":"2021-12-30","value":0.21926477597978772},{"time":"2022-12-30","value":0.23793956910452924},{"time":"2023-12-30","value":0.26153383329393814}],"ROA":[{"time":"2014-12-30","value":0.019650988432201588},{"time":"2015-12-30","value":0.03927470394275371},{"time":"2016-12-30","value":0.053745875490097},{"time":"2017-12-30","value":0.05801880805570396},{"time":"2018-12-30","value":0.11479598876686514},{"time":"2019-12-30","value":0.09096564139454594},{"time":"2020-12-30","value":0.0713685891241729},{"time":"2021-12-30","value":0.07961133945747392},{"time":"2022-12-30","value":0.09982747014551906},{"time":"2023-12-30","value":0.11254189657320635}]}

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/schedule exchange, 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, Paycom pay, expense management, mileage tracker/fixed and variable rates, garnishment management, and GL concierge applications; and talent management applications that include employee self-service, compensation budgeting, performance management, position management, and Paycom learning and content subscriptions, as well as my analytics, which offer employment predictor reporting. 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; COBRA administration; personnel action and performance discussion forms; surveys; and affordable care act applications, as well as Clue, which securely collect, track, and manage the vaccination and testing data of the workforce. Paycom Software, Inc. was founded in 1998 and is headquartered in Oklahoma City, Oklahoma.

Sector

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10-K
12/31/17

DCF

Discounted Cash Flow Valuation of Paycom Software, Inc.

Calculate

Growth Years

Growth

Start

End

Discount

Start

End

Multiple

g\r	+10%	+11%	+12%	+13%	+14%
0%	10	9	8	8	7
+1%	11	10	9	8	8
+2%	13	11	10	9	8
+3%	14	13	11	10	9
+4%	17	14	12	11	10

Years	0	1	2	3	4	5	6	7	8	9	10	TV
FCF	$287.9M	$373.6M	$474.5M	$589.6M	$716.4M	$850.8M	$987M	$1.118B	$1.235B	$1.331B	$1.398B	$13.98B
DCF		$324.8M	$358.8M	$387.7M	$409.6M	$423M	$426.7M	$420.2M	$403.8M	$378.4M	$345.5M	$3.455B
Value	$7.333B

Chart P/E ratio

In the chart Earnings are multiplied by this value.

Earnings Growth 38%

Earnings Stability 91%

Competitiveness and MOAT

High margins render the company resilient under dire circumstances, hence able to drive competitors out or acquire them. ROE and ROA measure the average flow generated by each invested dollar. Their marginal value is a forecast of future growth, and it is considered by Buffett and Munger the most important single indicator.

The Net Margin is high enough to offer a good protection on the profits in case of higher costs or higher interests. Furthermore higher margins reduce earnings’ volatility.

Over time the ROA has been increasing indicating a higher marginal ROA with respect to the calculated one, giving a good sign for continued growth.

Years	12-2015	12-2016	12-2017	12-2018	12-2019	12-2020	12-2021	12-2022	12-2023	TTM
Net Margin	9.2%	13%	15%	24%	24%	17%	19%	20%	20%	27%
ROA	3.9%	5.4%	5.8%	11%	9.1%	7.1%	8%	10%	11%	13%
ROE	21%	37%	49%	41%	34%	22%	22%	24%	26%	33%

What is the average Net Margin?

The average Net Margin over the past 5 years is +20.81%.

What is the trend of Net Margin?

The trend of Net Margin over the past 5 years is -0.88%.

What is the average Return on Assets (ROA)?

The average ROA over the past 5 years is +9.49%.

What is the trend of Return on Assets (ROA)?

The trend of ROA over the past 5 years is +0.07%.

What is the average Return on Equity (ROE)?

The average ROE over the past 5 years is +28.15%.

What is the trend of Return on Equity (ROE)?

The trend of ROE over the past 5 years is -3%.

Safety & Stabiliy

Being debt the number one cause of investment losses and company death, the ratio Debt/FCF is of utmost importance to guarantee safety. On the other hand the Graham’s stability measures the drawdown of earnings, hence indicating the reliability of the flow generated by the company.

Data are missing

The Graham’s stability indicate reliability of earnings, and consideration about the future are more dependable.

Years	12-2015	12-2016	12-2017	12-2018	12-2019	12-2020	12-2021	12-2022	12-2023	TTM
Debt FCF	1.01	0.56	0.51	0.29	0.26	0.25	0.16	0.12	-	-
Debt Equity	0.27	0.27	0.27	0.11	0.07	0.05	0.03	0.02	-	-
MIN
Graham Stability	-	-	100%	100%	100%	100%	100%	100%	100%	100%

What is the Debt/FCF?

The Debt/FCF trailing twelve month is -.

What is the trend of Debt/FCF?

The trend of Debt/FCF over the past 5 years is -0.04.

What is the Graham’s Stability?

Graham’s Stability measure stands at 1.00.

Growth

Growth can be dangerous when forecasting, simply projecting the current growth is in general wrong. A company passes through multiple phases, from being young and unprofitable, to the first periods of profitability and high growth, until it arrives at a period of regime with limited growth. Identifying in which phase the company is in may help forecasting.

Earnings growth has not been increasing in the past years.

Years	12-2016	12-2018	12-2020	12-2022	Trend
Revenue	26%	24%	26%	23%	-3%
Net Income	34%	20%	33%	21%	-22%
Stockholders Equity	41%	31%	26%	10%	-2.2%
FCF	27%	19%	30%	26%	-19%

What is the 5 year Revenue CAGR?

The Revenue CAGR over the past 5 years is +24.49%.

What is the trend of Revenue growth?

The trend of Revenue growth rate over the past 5 years is -3.01%.

What is the 5 year Earnings CAGR?

The Earnings CAGR over the past 5 years is +20.01%.

What is the trend of Earnings growth?

The trend of Earnings growth rate over the past 5 years is -22.26%.

What is the 5 year Equity CAGR?

The Equity CAGR over the past 5 years is +31.23%.

What is the trend of Equity growth?

The trend of Equity growth rate over the past 5 years is -2.18%.

What is the 5 year FCF CAGR?

The FCF CAGR over the past 5 years is +18.55%.

What is the trend of FCF growth?

The trend of FCF growth rate over the past 5 years is -18.6%.