Paycom Software, Inc. — Software - Application. Scored on the same transparent model behind the daily rankings.
★
PAYC
Paycom Software, Inc. · Software - Application
FCF$575mC+
Rev+9.2%B
D/E1.72C
P/E24.2xB+
PEG1.38B
75.8Score
$229.07$10.3B
1Y Target$203.81Analyst consensus · 16 analysts
5Y Target$298.40Compound horizon
10Y Target$442.66Long-dated conviction
FCF$575mTTMC+
FCF $575m — respectable but not differentiating
Rev+9.2%TTM YoYB
Revenue +9.2% — at or above S&P median
D/E1.72C
D/E 1.72 — more levered than most Technology peers (≈90th pctile)
P/E24.2xB+
P/E 24.2 — below the Technology median (≈40th pctile)
PEG1.38B
PEG 1.38 — acceptable premium for growth
Forward price target — the 1-year figure is the analyst consensus where the stock is covered; the 5- and 10-year figures compound our earnings estimate from there. The DCF below is a separate cross-check on intrinsic value (what it's worth today), not another target.
Quality-growth score · 75.8
Quality85.9
Growth80.0
Value63.2
Why this score
Buying back stock
Durable high returns
Entry · Margin of safety
52-week rangeNear 52-week high
2% off the 12-month high
vs DCF fair value27% belowest. fair value ~$313
What the price assumes: free cash flow compounding at ~2% a year for the next decade — vs the ~15% a year our model projects from current growth and analyst estimates.
Quality signals · context only
Gross profitability34% · B+gross profit ÷ total assets (Novy-Marx)
ROIC34.8% · Areturn on invested capital — not score-weighted
Model-generatedGenerated by the Bull Rankings model from this company's reported fundamentals, and checked against the figures shown above.
Why now
PAYC is a high-quality compounder, reflected in our model's robust Quality-growth score of 80.2/100, driven by its Quality pillar at 86. The company's cloud-based human capital management (HCM) solution, particularly its comprehensive payroll applications and talent acquisition suite for small to mid-sized companies, continues to drive impressive profitability, evidenced by a profit margin of 22.8% and ROE of 85.3%. This operational excellence, combined with a healthy $575m in free cash flow (TTM), suggests a business that effectively converts its growing revenue into shareholder value, making it a compelling long-term hold. The crux lies in its ability to sustain high returns on capital by expanding its integrated HCM platform.
Moat
Paycom's durable edge stems from the mission-critical nature and deep integration of its cloud-based HCM solution, encompassing everything from payroll and tax management to applicant tracking and on-boarding. The high ROE of 85.3% is a direct result of the significant switching costs associated with migrating complex payroll and HR data, creating a sticky customer base among small to mid-sized companies. This comprehensive, single-database platform, offering functionality and data analytics across the entire employment life cycle, makes it incredibly difficult for competitors to dislodge Paycom once embedded.
Risk
Skeptics will point to Paycom's valuation, which our model flags with a weaker Value pillar at 69, especially given its P/E (TTM) of 22.6 and PS (TTM) of 4.5. The Bull Rankings model's Reverse DCF indicates today's price implies only ~0% annual free-cash-flow growth sustained for 10 years, which seems overly pessimistic compared to its FY YoY revenue growth of 9.2%. While the implied FCF growth is low, the concern is that if revenue growth continues to decelerate or if competition in the HCM space intensifies, Paycom's current valuation multiples could compress further. A sustained drop in revenue growth below current levels would confirm the bear case.
Horizon
1-3 yr $203.81 (16-analyst consensus) — fundamentals + valuation re-rating. 5 yr $298.40 at ~5% CAGR — compounding case rests on the competitive position widening. 10 yr $442.66 if current growth sustains into durable earnings power.
Not investment advice. The Bull Rankings publishes a quantitative ranking model and accompanying analysis for general informational purposes only. Nothing on this page is a recommendation to buy, sell, or hold any security; nothing is personalized to your circumstances, risk tolerance, or tax situation. Investing carries the risk of loss — invest at your own risk and consider consulting a licensed financial professional before acting on anything you read here. See terms and methodology for full disclosures.
PAYC vs the Top Picks average
Pillar
PAYC
Book avg
Diff
Quality
0.86
0.84
+0.02
Growth
0.80
0.84
-0.04
Value
0.63
0.78
-0.15
Averaged across the 30 names in today's Top Picks (mean score 81.5). A name can beat these averages and still be absent from the book — it also applies concentration limits.
Score history · PAYC
Trend
-9.0 over 47 daily scores
From 84.8 (Jun 22) → 75.8 (now)
One point per daily model run. The range autoscales, so a flat-looking line can still hide 1–2 point moves — read the From → To values for the actual range.
Analyst estimate revisions
30-day change
+12.8%
90-day change
+12.6%
Forward EPS estimate
$13.85
Over the last 90 days, what analysts expect PAYC to earn is materially higher (+12.6%). The estimate is derived from price and forward P/E captured at the same instant, so a moving share price does not move this number — only a changed forecast does.
A rising estimate means expectations are improving, not that the price has failed to keep up — and estimates get cut as readily as they get raised. It is not part of the Bull Rankings score. Biggest movers across the market →
Position sizing · PAYC
$
%
%
Shares to buy
8
Position size
$1,833
3.7% of portfolio
Stop price
$171.80
25% below $229.07
$ at risk if stopped
$458.14
budget $500.00 · 1% of portfolio
Math only — share count is floor(portfolio × risk% ÷ (price × stop%)). Doesn't account for commissions, slippage, gap risk, or position-correlation across your book. Inputs persist locally; never sent to the server. Not investment advice.
Paycom Software, Inc. (PAYC): score, valuation & FAQ
Paycom Software, Inc. (PAYC) is a Software - Application company that scores 75.8 out of 100 on the Bull Rankings quality-growth model — a solid, above-average reading. The score blends three pillars — quality (durable returns, healthy margins, low leverage), growth (revenue and earnings), and value (valuation versus sector peers) — into one number, refreshed daily; it is a screen, not a buy recommendation.
Its strongest graded signals are P/E (B+). On valuation, PAYC sits about 27% below our discounted-cash-flow fair value (a margin of safety) — the current price implies roughly 2% annual free-cash-flow growth over the next decade.
Is PAYC a good stock to buy?
Bull Rankings scores PAYC 75.8 out of 100 on its quality-growth model, which is a solid, above-average reading. That is driven by P/E (B+). A score is a quantitative screen of Paycom Software, Inc.'s fundamentals, not personalised financial advice — weigh it against your own time horizon and risk tolerance, and read the risk factors below before acting.
Why does PAYC score 75.8 on Bull Rankings?
The quality-growth score blends three pillars — quality (returns on capital, margins, leverage, earnings quality), growth (revenue and earnings expansion), and value (valuation versus sector peers). PAYC earns its highest marks on P/E (B+). Each pillar is graded against sector-aware thresholds, then combined into the single 0–100 score.
Is PAYC overvalued or undervalued?
Based on $229.07, PAYC sits about 27% below our discounted-cash-flow fair value (a margin of safety) — the current price implies roughly 2% annual free-cash-flow growth over the next decade. It trades at a 24.2x P/E (graded B+). Discounted-cash-flow estimates are sensitive to growth and discount-rate assumptions, so treat this as a cross-check, not a price target.
What are the main risks of investing in PAYC?
Skeptics will point to Paycom's valuation, which our model flags with a weaker Value pillar at 69, especially given its P/E (TTM) of 22.6 and PS (TTM) of 4.5. The Bull Rankings model's Reverse DCF indicates today's price implies only ~0% annual free-cash-flow growth sustained for 10 years, which seems overly pessimistic compared to its FY YoY revenue growth of 9.2%. While the implied FCF growth is low, the concern is that if revenue growth continues to decelerate or if competition in the HCM space intensifies, Paycom's current valuation multiples could compress further. A sustained drop in revenue growth below current levels would confirm the bear case.
Bull Rankings is an automated fundamentals screen for research and education. It is not investment advice, and nothing here is a recommendation to buy or sell any security. Do your own research and consider consulting a licensed financial advisor.