# Paycom Software (PAYC.US)

Canonical: https://gigainvestors.com/s/PAYC

Analysis as of: 2026-10-16T07:31:03.097Z. Financial observations: FY2011–FY2026.

Listing currency: USD. Reporting currency: USD.

## Verdict

Not a wonderful business

Quality tests for Buy: not passed (profit record: pass; earnings resilience is evidence only). Published buy qualification: no.

Share price: $252.87 per share; close as of 2026-10-15.

Estimated value: low $134.19 per share, central $190.21 per share, high $222.84 per share. Buy at or below the central value $190.21 per share. Valuation as of 2026-10-16T07:31:03.097Z; scenarios are not confidence intervals.

Expected annual return: 8.3% at the stated quote. About 8.3% a year at today's price (required return 10.0%). required return 10.0% a year (10% floor; US 10-year bond 5.1% + 4 points).

## Checklist

### understandable: pass

- 0 revenue declines in the last 10 years (informational)

- Financial history: 10 years

- Years with declining revenue: 0

- Years with a net loss: 0

- Operating margin variation: 0.12×

Chart: Operating margin; fiscal year observations.

- FY2017: 0.30×

- FY2018: 0.31×

- FY2019: 0.31×

- FY2020: 0.22×

- FY2021: 0.24×

- FY2022: 0.28×

- FY2023: 0.27×

- FY2024: 0.34×

- FY2025: 0.28×

- LTM to Jun 2026: 0.30×

### moat: fail

- Recent gross margin fell 5.2pp below the typical margin (limit 4pp)

- ROIC, median of available years: 38.0%

- ROIC, second-lowest year: 29.7%

- Typical minus recent gross margin: 5.2 pp

- Typical gross margin (annual median): 83.8%

- Recent gross margin (lower of latest and 3-year median): 78.6%

- Years with nonpositive capital: 0

- Capital spending / revenue: 11.8%

- ROIC including acquisitions, ten-year median: 29.9%

Chart: ROIC excluding acquisitions; fiscal year observations.

- FY2016: 71.5%

- FY2017: 54.8%

- FY2018: 50.2%

- FY2019: 48.3%

- FY2020: 29.7%

- FY2021: 32.7%

- FY2022: 35.3%

- FY2023: 31.5%

- FY2024: 40.7%

- FY2025: 28.4%

### economics: pass

- Owner earnings / net income, 5-yr: 0.98×

- Cash conversion uses consolidated totals: No

- Owner earnings, five-year total: $1.7B

- Net income, five-year total: $1.8B

- Return on incremental invested capital: 61.7%

- Working capital / revenue, annual change: 0.4 pp

- Working capital / revenue, change between three-year averages: 2.6 pp

- Working capital / revenue, final three-year average: 2.9%

Chart: Annual owner cash / profit; fiscal year observations.

- FY2021: 1.00×

- FY2022: 1.00×

- FY2023: 1.00×

- FY2024: 1.00×

- FY2025: 0.92×

### management: pass

- Historical market-dollar context (not the management verdict): 2016 to 2025 (9 years)

- buybacks leaned toward cheaper years (informational)

- ROIC first 3 years vs last 3 years: 54.8% vs 31.5%

- Per-share earnings: 0.74 to 8.08 (three-year endpoint medians)

- Management verdict uses per-share economic progress: Yes

- Ordinary dilution, 10-year annual growth: -0.3%

- Ordinary dilution, 5-year annual growth: -0.8%

- Market cap gain: $6.1B

- Cumulative retained earnings: $2.2B

- Diluted shares, 10-year annual growth: -0.3%

- Diluted shares, 5-year annual growth: -0.8%

- $1 test, starting fiscal year: FY2016

- $1 test, ending fiscal year: FY2025

- Per-share value growth: 34.7%

- Per-share value change: $7.34

- Per-share value, starting three-year median: $0.74

- Per-share value, ending three-year median: $8.08

- Buybacks concentrated in cheaper years (correlation): 0.85

- Average buyback yield: 1.3%

- Buyback history: 10 years

- Debt-funded buybacks: No

- Acquisition spending: $58M

- Cumulative net income, 10 years: $2.3B

- ROIC, first three-year median: 54.8%

- ROIC, last three-year median: 31.5%

Chart: Earnings per share; fiscal year observations.

- FY2016: $0.74

- FY2017: $1.14

- FY2018: $2.34

- FY2019: $3.09

- FY2020: $2.46

- FY2021: $3.37

- FY2022: $4.84

- FY2023: $5.88

- FY2024: $8.92

- FY2025: $8.08

### accounting: fail

- latest-year receivables to sales index (DSRI) exceeds 1.465

- stock compensation exceeds 15% of operating cash flow

- Sloan accruals: -3.0%

- Receivables to sales index (DSRI): 2.21×

- Restructuring years, last five: 0

- Stock compensation / operating cash flow: 17.5%

- Earnings backed by cash: Yes

- Operating cash / earnings: 1.50×

- Accounting red flags: 2

- Goodwill and intangibles / equity: 0.05×

Chart: Sloan accruals; fiscal year observations.

- FY2016: -5.1%

- FY2017: -4.1%

- FY2018: -3.1%

- FY2019: -1.8%

- FY2020: -3.2%

- FY2021: -3.8%

- FY2022: -2.1%

- FY2023: -3.4%

- FY2024: -0.5%

- FY2025: -3.0%

## Holders

- [Terry Smith](https://gigainvestors.com/FS): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Bill Nygren](https://gigainvestors.com/HA): tracked 13F investor; follow the investor page for holding quarter and amounts.

- [Robert Vinall](https://gigainvestors.com/RVC): tracked 13F investor; follow the investor page for holding quarter and amounts.

## Price story

Down 54% since Oct 2021 · "Payroll software maker Paycom forecasts weak 2026 revenue, shares fall" (finance.yahoo.com, Feb 2026) · sales +4.3%

Story as of 2026-10-16T09:59:21.955Z; price observation 2026-10-15.

Price needs cash profits to grow 10.1% a year for ten years

- 2025-11-06: Paycom Stock Declines 8% as Q3 Earnings Miss Estimates, Sales Rise Y/Y ([finance.yahoo.com](https://finance.yahoo.com/news/paycom-stock-declines-8-q3-125800478.html))

- 2026-02-11: Payroll software maker Paycom forecasts weak 2026 revenue, shares fall ([finance.yahoo.com](https://finance.yahoo.com/news/payroll-software-maker-paycom-forecasts-233043256.html))

- 2026-03-08: Why Paycom (PAYC) Is Up 9.7% After Boosting Buybacks and Issuing Cautious 2025 Outlook ([finance.yahoo.com](https://finance.yahoo.com/news/why-paycom-payc-9-7-080912064.html))

- 2026-08-11: PAYC Q2 Deep Dive: Automation and New Products Drive Margin Expansion and Guidance Lift ([finance.yahoo.com](https://finance.yahoo.com/markets/stocks/articles/payc-q2-deep-dive-automation-142922746.html))

### Sales · FY2025–2026

sales +4.3%; source https://www.sec.gov/Archives/edgar/data/1590955/000119312526059372/payc-20251231.htm; observed 2026-02-19.

- FY2017: $433M 

- FY2018: $566M 

- FY2019: $738M 

- FY2020: $841M 

- FY2021: $1.1B 

- FY2022: $1.4B 

- FY2023: $1.7B 

- FY2024: $1.9B 

- FY2025: $2.1B 

- FY2026: $2.1B 

### Gross margin · FY2025

gross margin 78.6%; source https://www.sec.gov/Archives/edgar/data/1590955/000119312526059372/payc-20251231.htm; observed 2026-02-19.

- FY2016: 83.6% 

- FY2017: 83.4% 

- FY2018: 84.0% 

- FY2019: 85.1% 

- FY2020: 85.3% 

- FY2021: 84.7% 

- FY2022: 84.5% 

- FY2023: 83.7% 

- FY2024: 82.2% 

- FY2025: 78.6% 

## Owner memo

Memo as of 2026-10-16T08:06:05.509Z.

### How it makes money

Operates in software application; annual sales are USD 2.1 billion.

- Source: https://www.sec.gov/Archives/edgar/data/1590955/000119312526059372/payc-20251231.htm (filed 2026-02-19); FY2025: revenue 2051699999; grossProfit 1612400000; margin = grossProfit / revenue.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); PAYC.US: Paycom Software, Inc. provides cloud-based human capital management (HCM) solution delivered as software-as-a-service for small to mid-sized companies in the United States. The company offers functionality and data analytics that businesses need to manage the employment life cycle from recruitment to retirement. The company's HCM solution offers payroll applications comprising better employee transaction interface, payroll and payroll tax management, payroll card, Everyday, Paycom pay, Client Action Center, expense management, garnishment administration, and GL concierge applications; talent acquisition, including applicant tracking, background checks, on-boarding, e-verify, and tax credit services; and talent management applications that include employee self-service, compensation budgeting, performance management, position management, Paycom learning, certification management. The company also offers time and labor management, such as time and attendance, scheduling, time-off requests, and labor allocation solutions. Its HCM solution provides manager on-the-go that gives supervisors and managers the ability to perform a variety of tasks, such as approving time-off requests and expense reimbursements; direct data exchange; ask here, a tool for direct line of communication to ask work-related questions; document and checklist; government and compliance; benefits administration; COBRA administration; personnel action and performance discussion forms; Paycom surveys; retirement reporting; report center; and affordable care act applications, as well as Clue, which securely collects, tracks, and manages the vaccination and testing data of the workforce; and MyCom is a communications tool that provides organizations with a central place to share information with employees. Paycom Software, Inc. was founded in 1998 and is based in Oklahoma City, Oklahoma.

### Why customers stay

Margins ranged from 78.6% to 83.7% during 2023–25; it earns 38% on its capital.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); FY2023: grossProfit / revenue = 83.7%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); FY2024: grossProfit / revenue = 82.2%.

- Source: https://www.sec.gov/Archives/edgar/data/1590955/000119312526059372/payc-20251231.htm (filed 2026-02-19); FY2025: grossProfit / revenue = 78.6%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); 10-year return on capital observations [[2016,0.714670800311089],[2017,0.5476986874962834],[2018,0.5019007271239129],[2019,0.48349747016958977],[2020,0.2973410125012296],[2021,0.3273699133426458],[2022,0.35342314117521134],[2023,0.3151669661951535],[2024,0.4070263679901665],[2025,0.2840263151047229]]; median 0.3802247545826889. ROIC follows the displayed moat series; financial companies use return on tangible equity.

### Can it raise prices

Kept about a 85% gross margin through 2022 cost inflation.

- Source: https://www.sec.gov/Archives/edgar/data/1590955/000119312526059372/payc-20251231.htm (filed 2026-02-19); Gross margin observations: [[2021,0.8466297308256373],[2022,0.8453315881326352],[2023,0.836866032945622]]; range within 2 percentage points.

### Where the cash goes

Spends 13.6% of cash earnings on expansion; earns 61.7% on new investment.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); FY2016: growth capex 30173000; upkeep 13632000; owner earnings 43840000. Growth capex / owner earnings = 0.6882527372262773.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); FY2017: growth capex 32713955.766365483; upkeep 26675044.233634517; owner earnings 59526955.76636548. Growth capex / owner earnings = 0.5495654085648682.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); FY2018: growth capex 30249000; upkeep 29657000; owner earnings 137065000. Growth capex / owner earnings = 0.22069091307044103.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); FY2019: growth capex 50723000; upkeep 42211000; owner earnings 180576000. Growth capex / owner earnings = 0.280895578592947.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); FY2020: growth capex 33412111.534580328; upkeep 60689888.46541967; owner earnings 136136111.53458032. Growth capex / owner earnings = 0.24543165775741452.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); FY2021: growth capex 58970000; upkeep 67222000; owner earnings 195960000. Growth capex / owner earnings = 0.30092876097162685.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); FY2022: growth capex 44098000; upkeep 92700000; owner earnings 281389000. Growth capex / owner earnings = 0.15671543663753737.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); FY2023: growth capex 82931000; upkeep 113900000; owner earnings 340788000. Growth capex / owner earnings = 0.24335070483702478.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); FY2024: growth capex 51400000; upkeep 145900000; owner earnings 502000000. Growth capex / owner earnings = 0.10239043824701195.

- Source: https://www.sec.gov/Archives/edgar/data/1590955/000119312526059372/payc-20251231.htm (filed 2026-02-19); FY2025: growth capex 56630799.99281812; upkeep 214269200.00718188; owner earnings 415430799.9928181. Growth capex / owner earnings = 0.13631825082251278.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); Incremental return on capital 0.6168682824416811, from the economics test's unchanged annual inputs.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); Dividend observations: [[2016,0],[2017,0],[2018,0],[2019,0],[2020,0],[2021,0],[2022,0],[2023,64838000],[2024,84800000],[2025,84800000]]. Zero only counted when supported by a complete cash-flow statement.

- Source: https://www.sec.gov/Archives/edgar/data/1590955/000119312526059372/payc-20251231.htm (filed 2026-02-19); FY2025: cash repurchases 325500000 USD.

### Are managers owners

Insiders own 14.1% of the company.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-10-16); PAYC.US SharesStats.PercentInsiders = 14.066999999999998 percentage points; cache date 2026-10-16.

### What the price says

The price assumes cash profits grow 10.1% yearly over ten years; actual growth was 35.2%.

- Source: https://eodhd.com/financial-apis/stock-etfs-fundamental-data-feeds/ (filed 2026-02-19); Ten-year compound average after fade. Initial solved rate 0.1329423027162132. Price 252.87; FX 1; discount 0.1; same standard ten-year fade to terminal 0.03. FY2015 owner earnings/share 0.36162134817687247 → FY2025 7.403072207442051. Closing-price date 2026-10-15.

## Monthly share-price history (USD per share)

- 2016-10: $51.73 per share

- 2016-11: $44.87 per share

- 2016-12: $45.49 per share

- 2017-01: $46.24 per share

- 2017-02: $53.83 per share

- 2017-03: $57.51 per share

- 2017-04: $60.25 per share

- 2017-05: $65.44 per share

- 2017-06: $68.41 per share

- 2017-07: $70.09 per share

- 2017-08: $74.61 per share

- 2017-09: $74.96 per share

- 2017-10: $82.20 per share

- 2017-11: $82.00 per share

- 2017-12: $80.33 per share

- 2018-01: $91.64 per share

- 2018-02: $98.92 per share

- 2018-03: $107.39 per share

- 2018-04: $114.21 per share

- 2018-05: $105.47 per share

- 2018-06: $98.83 per share

- 2018-07: $106.25 per share

- 2018-08: $155.12 per share

- 2018-09: $155.41 per share

- 2018-10: $125.20 per share

- 2018-11: $132.77 per share

- 2018-12: $122.45 per share

- 2019-01: $148.24 per share

- 2019-02: $181.73 per share

- 2019-03: $189.13 per share

- 2019-04: $202.53 per share

- 2019-05: $212.10 per share

- 2019-06: $226.72 per share

- 2019-07: $240.75 per share

- 2019-08: $250.12 per share

- 2019-09: $209.49 per share

- 2019-10: $211.53 per share

- 2019-11: $276.81 per share

- 2019-12: $264.76 per share

- 2020-01: $318.16 per share

- 2020-02: $282.65 per share

- 2020-03: $202.01 per share

- 2020-04: $261.02 per share

- 2020-05: $297.23 per share

- 2020-06: $309.73 per share

- 2020-07: $284.37 per share

- 2020-08: $299.46 per share

- 2020-09: $311.30 per share

- 2020-10: $364.09 per share

- 2020-11: $417.08 per share

- 2020-12: $452.25 per share

- 2021-01: $379.74 per share

- 2021-02: $374.24 per share

- 2021-03: $370.06 per share

- 2021-04: $384.41 per share

- 2021-05: $329.60 per share

- 2021-06: $363.47 per share

- 2021-07: $400.00 per share

- 2021-08: $488.90 per share

- 2021-09: $495.75 per share

- 2021-10: $547.85 per share

- 2021-11: $437.48 per share

- 2021-12: $415.19 per share

- 2022-01: $335.30 per share

- 2022-02: $339.21 per share

- 2022-03: $346.38 per share

- 2022-04: $281.47 per share

- 2022-05: $284.34 per share

- 2022-06: $280.12 per share

- 2022-07: $330.49 per share

- 2022-08: $351.20 per share

- 2022-09: $329.99 per share

- 2022-10: $346.00 per share

- 2022-11: $339.10 per share

- 2022-12: $310.31 per share

- 2023-01: $323.94 per share

- 2023-02: $289.06 per share

- 2023-03: $304.01 per share

- 2023-04: $290.37 per share

- 2023-05: $280.13 per share

- 2023-06: $321.24 per share

- 2023-07: $368.76 per share

- 2023-08: $294.84 per share

- 2023-09: $259.27 per share

- 2023-10: $244.97 per share

- 2023-11: $181.66 per share

- 2023-12: $206.72 per share

- 2024-01: $190.24 per share

- 2024-02: $182.39 per share

- 2024-03: $199.01 per share

- 2024-04: $187.98 per share

- 2024-05: $145.32 per share

- 2024-06: $143.04 per share

- 2024-07: $166.79 per share

- 2024-08: $162.78 per share

- 2024-09: $166.57 per share

- 2024-10: $209.03 per share

- 2024-11: $231.92 per share

- 2024-12: $204.97 per share

- 2025-01: $207.56 per share

- 2025-02: $219.47 per share

- 2025-03: $218.48 per share

- 2025-04: $226.39 per share

- 2025-05: $259.09 per share

- 2025-06: $231.40 per share

- 2025-07: $231.54 per share

- 2025-08: $227.15 per share

- 2025-09: $208.14 per share

- 2025-10: $187.09 per share

- 2025-11: $161.17 per share

- 2025-12: $159.36 per share

- 2026-01: $134.75 per share

- 2026-02: $125.83 per share

- 2026-03: $121.54 per share

- 2026-04: $126.76 per share

- 2026-05: $139.67 per share

- 2026-06: $125.68 per share

- 2026-07: $163.96 per share

- 2026-08: $239.10 per share

- 2026-09: $217.65 per share

- 2026-10: $252.87 per share

## Annual estimated value (USD per share)

- FY2016: low $4.65 per share, central $5.16 per share, high $5.85 per share

- FY2017: low $8.14 per share, central $9.18 per share, high $10.56 per share

- FY2018: low $14.66 per share, central $16.60 per share, high $19.19 per share

- FY2019: low $21.02 per share, central $23.63 per share, high $27.12 per share

- FY2020: low $27.84 per share, central $31.36 per share, high $36.05 per share

- FY2021: low $50.20 per share, central $69.81 per share, high $81.24 per share

- FY2022: low $72.17 per share, central $100.35 per share, high $116.76 per share

- FY2023: low $89.84 per share, central $129.00 per share, high $150.84 per share

- FY2024: low $104.21 per share, central $149.05 per share, high $174.05 per share

- FY2025: low $106.51 per share, central $149.64 per share, high $174.75 per share

Historical values use today's bond yield for every fiscal year

Historical values use today's FX rate into trading currency for every fiscal year

Historical values use current restated fundamentals and current commodity classification; they are not point-in-time estimates

## Sources

[Original 10-K filing](https://www.sec.gov/Archives/edgar/data/1590955/000119312526059372/payc-20251231.htm); period 2025-12-31, filed 2026-02-19.

Estimates depend on assumptions and are not guarantees or investment advice. Underlying data remains subject to its source licenses; public reading does not grant bulk redistribution rights.