Paycom Software Inc (PAYC, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $239.97, Paycom Software Inc has witnessed a daily loss of 0.12%, marked against a three-month change of 42.81%. A thorough analysis, underlined by the GF Score, suggests that Paycom Software Inc is well-positioned for substantial growth in the near future.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 9/10
- Profitability rank: 9/10
- Growth rank: 10/10
- GF Value rank: 4/10
- Momentum rank: 6/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in financial strength, profitability, and growth, GuruFocus assigned Paycom Software Inc the GF Score of 92 out of 100, which signals the highest outperformance potential.
Understanding Paycom Software Inc Business
Paycom Software Inc is a fast-growing provider of payroll and human capital management software primarily targeting clients with 50 to 10,000 employees in the United States. Established in 1998, Paycom Software Inc services about 19,500 clients as of 2023. Alongside its core payroll software, Paycom offers various HCM add-on modules, including time and attendance, talent management, and benefits administration. With a market cap of $13.84 billion, sales of $1.82 billion, and an operating margin of 32.49%, Paycom Software Inc demonstrates a strong business model and operational efficiency.
Financial Strength Breakdown
According to the Financial Strength rating, Paycom Software Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Paycom Software Inc stands impressively at 226.25, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5. With an Altman Z-Score of 5.95, Paycom Software Inc exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.04, Paycom Software Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Paycom Software Inc's impressive standing among its peers in generating profit. Paycom Software Inc's strong Predictability Rank of 3.5 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Paycom Software Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 26.5%, which outperforms better than 82.4% of 2,483 companies in the Software industry. Moreover, Paycom Software Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 35.2, and the rate over the past five years is 23.5. This trend accentuates the company's continued capability to drive growth.
Conclusion: A Promising Future for Paycom Software Inc
With its strong financial strength, impressive profitability, and robust growth metrics, Paycom Software Inc's GF Score highlights the firm's unparalleled position for potential outperformance. As the company continues to innovate and expand its market presence, investors may find Paycom Software Inc a compelling addition to their portfolios. For those interested in exploring more companies with strong GF Scores, GuruFocus Premium members can utilize the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
