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Paycom Software (PAYC) Gains As Market Dips: What You Should Know

Zacks Equity Research
Sanmina (SANM) closed at $30.68 in the latest trading session, marking a +0.69% move from the prior day.

Paycom Software (PAYC) closed at $183.12 in the latest trading session, marking a +0.79% move from the prior day. This move outpaced the S&P 500's daily loss of 0.01%. At the same time, the Dow lost 0.1%, and the tech-heavy Nasdaq gained 0.12%.

Heading into today, shares of the maker of human-resources and payroll software had lost 0.43% over the past month, lagging the Computer and Technology sector's gain of 4.57% and the S&P 500's gain of 2.24% in that time.

Investors will be hoping for strength from PAYC as it approaches its next earnings release. In that report, analysts expect PAYC to post earnings of $1.12 per share. This would mark year-over-year growth of 17.89%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $195.57 million, up 27.06% from the year-ago period.

PAYC's full-year Zacks Consensus Estimates are calling for earnings of $3.21 per share and revenue of $713 million. These results would represent year-over-year changes of +20.22% and +25.9%, respectively.

It is also important to note the recent changes to analyst estimates for PAYC. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. PAYC is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that PAYC has a Forward P/E ratio of 56.64 right now. This represents a discount compared to its industry's average Forward P/E of 57.95.

Also, we should mention that PAYC has a PEG ratio of 2.27. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. PAYC's industry had an average PEG ratio of 3.38 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 60, which puts it in the top 24% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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