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Based in Oklahoma City, Paycom Software, Inc. (PAYC) provides cloud-based human capital management (HCM) software, offering integrated employee records and talent management solutions. Valued at a market cap of $9.5 billion, its platform covers the entire employment life cycle, from recruitment to retirement, and includes services like payroll, benefits administration, and HR management.
PAYC shares have significantly underperformed the broader market over the last year. The stock has plunged 42.5% over this time frame, while the broader S&P 500 Index ($SPX) has surged 27.5%. In 2024, the stock is down 20.4%, lagging SPX's 17.8% gains on a YTD basis.
Zooming in further, PAYC has also underperformed the First Trust Cloud Computing ETF (SKYY). The exchange-traded fund has gained about 27.2% over the past year and returned 11.4% on a YTD basis.
On Jul. 31, PAYC rose marginally after the company released its Q2 earnings report. It reported a second-quarter profit of $68 million, or $1.20 per share, with adjusted earnings of $1.62 per share, exceeding Wall Street's expectations of $1.58 per share. The company posted revenue of $437.5 million, also surpassing forecasts of $436.2 million.
For the current fiscal year, ending in December, analysts expect PAYC’s EPS to grow 15.3% annually to $6.80 on a diluted basis. The company's earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 19 analysts covering PAYC stock, the overall consensus rating is a “Hold.” That’s based on two “Strong Buy” ratings and 17 “Holds.”
This configuration has been relatively stable over the past months.
On August 1, TD Cowen analyst Jared Levine raised Paycom's price target from $147 to $171 while maintaining a “Hold” rating. The firm lowered PAYC’s 2024 revenue guidance despite strong new client sales, citing some uncertainty following the Q2 performance.
The mean price target of $179.85 represents a 9.3% premium to PAYC’s current price levels. The Street-high price target of $250 suggests an upside potential of 51.9%.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
