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Paycom Software Inc PAYC

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Paycom Has a Big Payday as the Firm Posts Solid Second-Quarter Results; FVE up to $378

Brian Colello, CPA Sector Director

Analyst Note

| Brian Colello, CPA |

Narrow-moat Paycom Software reported great second-quarter results, handily beating our estimates on both the top and bottom lines. We are raising our fair value estimate to $378 from $343 on the back of a more robust outlook for the second half of fiscal 2021 and an expected customer mix shift to enterprise clients. On the top line, with a strong vaccination drive coupled with a strong labor market recovery, we are modeling stronger-than-expected near-term growth for Paycom. The recovery in the labor market is of particular importance as Paycom, much like other businesses in the human capital management space, charges customers on a per-employee-per-year basis. While we think Paycom has a long runway for growth and increasing upstream penetration, we believe the market has factored in even greener pastures. As a result, we view the shares as marginally overvalued at current levels.

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Company Profile

Business Description

Paycom Software is a fast-growing provider of cloud-based human capital management applications, serving over 26,500 small to midsize customers. The company's full suite is delivered via the web and includes features such as talent acquisition, time and labor management, payroll, talent management, and HR management.

Contact
7501 W. Memorial Road
Oklahoma City, OK, 73142
T +1 405 722-6900
Sector Technology
Industry Software - Application
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Speculative Growth
Employees 4,218

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