Paycom Software (PAYC) Laps the Stock Market: Here's Why
The most recent trading session ended with Paycom Software (PAYC) standing at $191.34, reflecting a +0.93% shift from the previouse trading day's closing. The stock exceeded the S&P 500, which registered a gain of 0.89% for the day. On the other hand, the Dow registered a gain of 1.03%, and the technology-centric Nasdaq increased by 1.25%.
Shares of the maker of human-resources and payroll software have depreciated by 0.25% over the course of the past month, underperforming the Computer and Technology sector's gain of 3.77% and the S&P 500's gain of 3.56%.
The upcoming earnings release of Paycom Software will be of great interest to investors. The company's earnings per share (EPS) are projected to be $2.43, reflecting a 1.22% decrease from the same quarter last year. Meanwhile, the latest consensus estimate predicts the revenue to be $495.86 million, indicating a 9.79% increase compared to the same quarter of the previous year.
For the entire fiscal year, the Zacks Consensus Estimates are projecting earnings of $7.65 per share and a revenue of $1.87 billion, representing changes of -1.29% and +10.45%, respectively, from the prior year.
Any recent changes to analyst estimates for Paycom Software should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the company's business health and profitability.
Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.
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. Over the last 30 days, the Zacks Consensus EPS estimate has moved 1.4% lower. Paycom Software currently has a Zacks Rank of #4 (Sell).
In terms of valuation, Paycom Software is presently being traded at a Forward P/E ratio of 24.77. For comparison, its industry has an average Forward P/E of 30.05, which means Paycom Software is trading at a discount to the group.
Also, we should mention that PAYC has a PEG ratio of 2.42. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. As the market closed yesterday, the Internet - Software industry was having an average PEG ratio of 1.81.
The Internet - Software industry is part of the Computer and Technology sector. With its current Zacks Industry Rank of 37, this industry ranks in the top 15% of all industries, numbering over 250.
The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
You can find more information on all of these metrics, and much more, on Zacks.com.
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Paycom Software, Inc. (PAYC) : Free Stock Analysis Report
