PAYC
Paycom Software, Inc.$125.83
Buy
Target $206.05
Report: Mar 07, 2026Technology • Software - Application • Mature CompounderSnapshot
Decision-first overview with recommendation, valuation anchor, and current setup.
Company Overview
Research Snapshot
Price History
Pelican View
Current$125.83+63.8%
Rec: BuyConviction: High
Entry Target
$125.83
(0% above current)
Fair Value
$206.05
(64% above current)
Stop Loss
$104.90
(17% below current)
Position Size
Full
Time Horizon
Long-Term
Key Metrics
Live Snapshot
Market Data
52 Week High$267.76
52 Week Low$104.90
Avg. 3 Month Volume1.86M
Efficiency
LTM Gross Margin83.2%
LTM EBITDA Margin38.9%
LTM EBIT Margin30.4%
LTM Operating Margin27.6%
LTM ROA8.9%
LTM ROE26.1%
LTM ROIC36.5%
LTM ROCE29.3%
Capital Structure
Market Cap (MM)$6.6B
Enterprise Value (MM)$6.3B
Shares Outstanding54.90M
Total Debt (MM)$90.30M
Cash & Equivalents (MM)$370.00M
LTM Net Debt (MM)$-279.70M
LTM Net Debt/EBITDA-0.4x
Growth
TTM Rev. Growth8.9%
Last 3-Yr Rev. CAGR14.3%
Last 3-Yr EBITDA CAGR18.1%
Last 3-Yr EPS CAGR18.7%
Valuation
Street Target Price$151.82
LTM EV/Revenue3.1x
LTM EV/Gross Profit3.7x
LTM EV/EBIT10.1x
LTM EV/EBITDA7.9x
LTM P/E14.5x
LTM EV/FCF15.5x
LTM P/FCF16.2x
LTM P/TB0.9x
LTM P/B3.8x
Dividend Yield1.2%
Payout Ratio18.5%
Executive SummarySituation: Current price is $125.83 versus fair value $206.05 (63.8% expected return), and valuation confidence is stable. Debate: Bull case depends on Normalization of Capital Expenditures: Management has indicated that the $100 million AI data-center spend is front-loaded. Bear case centers on Moat Erosion via Revenue Cannibalization: The Beti product may continue to cannibalize high-margin service fees faster than new automation efficiencies can offset them, leading to permanent margin impairment. Conclusion: Recommendation is Buy with Full sizing and Long-Term horizon.
Bull Case
AI-driven automation through IWant and Beti will drive long-term adjusted EBITDA margins toward 43% by reducing internal support tickets by 20-30%. The company's net cash position and aggressive buybacks (4.9% share count reduction) will accelerate EPS growth even as top-line growth moderates.
Bear Case
The Beti product permanently cannibalizes high-margin payroll correction fees, leading to a structural deceleration in revenue growth to mid-single digits. Competitive pressure from AI-integrated offerings by ADP and Workday could erode Paycom's pricing power and market share.
Key Catalysts
Near-Term (0-6 months)Impact: High
Normalization of Capital Expenditures: Management has indicated that the $100 million AI data-center spend is front-loaded. A return to hist...
Mid-Term (6-18 months)Impact: Critical
IWant Adoption and Monetization: Continued growth in IWant usage (already up 80% in early 2026) will validate the product's value propositio...
Long-Term (18+ months)Impact: Moderate
Paycom is relevant for analysis now because the stock is trading near its 52-week low ($104.90) despite reporting record operating cash flow...
Primary Risks
Concern: Medium
Moat Erosion via Revenue Cannibalization: The Beti product may continue to cannibalize high-margin service fees faster than new automation e...
Concern: Low
Execution Risk in Sales Leadership: The recent return of Jeff York as Chief Sales Officer and the transition of Amy Vickroy Walker to a cons...
Concern: Medium
Stewardship is high-conviction but requires monitoring of insider sales. The Governance Outcome Tree suggests: 1. Status Quo: Management con...
Recent Activity
2025-11-06SEC Filing (8-K)
-10.72%Paycom Software, Inc. reports third quarter 2025 financial results
2025-05-08SEC Filing (8-K)
+9.04%Paycom Software reports Q1 2025 financial results with 6% revenue growth and raised full year outlook.
2024-11-06Market Movement
+5.74%Market/Sector Move +5.74%
2024-10-31SEC Filing (8-K)
+21.35%Paycom Software, Inc. reports third quarter 2024 financial results with 11% revenue growth and strong profitability.
2024-05-31SEC Filing (8-K)
-8.58%Paycom Software appoints Randy Peck as Chief Operating Officer and Chris Thomas resigns as Co-CEO.
Valuation Table
9.8/10Decision Grade
Scenario Range
$138
Bear
$223
Base
$285
Bull
$126