Key Stats for Paycom Stock
- Earnings Reaction: +0.88%
- Current Price: $114.71
- Valuation Model Target: $170.98
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What Happened?
Paycom Software, Inc. (PAYC) shares edged higher following its fourth-quarter earnings release, gaining 0.88% on its reporting date to close at $114.71.
The cloud-based human capital management software provider delivered a solid financial performance that safely topped Wall Street expectations.
Revenue reached $544.30 million, beating the consensus estimate of $542.79 million.
Additionally, Adjusted EPS came in at $2.45, matching the $2.45 analyst expectation.
Despite the strong bottom line, investors were hesitant to bid the stock significantly higher due to cautious revenue guidance for 2026.
Management guided for total revenue to grow between 6% and 7% year-over-year.
While this represents a slight deceleration from historical growth rates, Paycom is executing a massive strategic pivot toward full solution automation.
The human resources and payroll software industry is undergoing a radical transformation as artificial intelligence eliminates manual data entry and complex administrative tasks.
Paycom is leading this charge with its command-driven AI product, IWant, alongside automation tools like Beti and GONE.
These tools allow the software to make automated decisions without requiring users to log in or manually move data.
See analysts’ growth forecasts and price targets for Paycom stock (It’s free!) >>>
Is Paycom Undervalued Today?
The TIKR Model indicates that the market is over-indexing on near-term revenue guidance while severely undervaluing the company’s exceptional profitability and sticky recurring revenue.
The model projects a target price of $170.98, representing a highly lucrative 49.1% upside from current levels.
During the earnings call, CEO Chad Richison explained how this shift toward full solution automation is driving unparalleled efficiency for their clients.
Richison stated verbatim: “Beti is one of these and reduces payroll processing labor by up to 90% while cutting the time spent correcting payroll errors by up to 85%. Another is GONE, which automates PTO, fully streamlining time off requests.”
He also emphasized how the company’s single database architecture gives them a massive structural advantage over fragmented competitors.
Richison added verbatim: “Our single database architecture and employee-first technology allow us to offer automated decisioning that is unmatched in our industry.”
Read the full Paycom Transcript on TIKR to see the revenue breakdown >>>
Valuation Deep Dive
The TIKR Advanced Valuation Model identifies Paycom as a highly profitable software compounder trading at a steep discount to its historical valuation.
- Target Price: $170.98
- Current Price: $114.71
- Annualized Return: 8.6%
Industry-Leading Margins: Paycom operates one of the most profitable SaaS business models in the public markets. The company reported a full-year adjusted EBITDA margin of 43%, up 180 basis points year-over-year. This incredible cash generation allowed the company to produce $404 million in free cash flow, representing a 20% margin.
Aggressive Capital Returns: Armed with zero debt and $370 million in cash, management is actively rewarding shareholders. Over the past year, Paycom repurchased 1.7 million shares for $370 million and paid out $85 million in dividends. The company still has $1.1 billion remaining under its buyback authorization, providing a massive floor for the stock price.
Conclusion: A cash flow machine executing a necessary strategic pivot. With a projected 49.1% total return potential, Paycom offers patient investors a prime opportunity to buy a premier software asset at a discount. The path to $170 is secured by industry-leading EBITDA margins, zero debt, and a revolutionary shift toward AI-driven payroll automation.
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How Much Upside Does Paycom Stock Have From Here?
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- Operating Margins
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
