Paycom Software (PAYC): Reassessing Valuation After Recent Share Price Weakness
Paycom Software (PAYC) has been under pressure lately, with shares down around 10% over the past month and roughly 26% in the past 3 months, prompting fresh questions about its valuation.
See our latest analysis for Paycom Software.
Zooming out, the stock’s recent slide sits on top of a much tougher backdrop, with a negative 1 year total shareholder return and a steep 3 year total shareholder return decline suggesting momentum has been fading despite ongoing revenue and profit growth.
If Paycom’s volatility has you rethinking concentration risk, it could be a good moment to explore high growth tech and AI stocks for other software and tech names with different growth and risk profiles.
So with Paycom still growing earnings while trading at a steep discount to analyst targets and many valuation models, should investors view this pullback as a potential mispricing opportunity, or interpret it as a sign that markets already see limited future upside?
Most Popular Narrative Narrative: 21.1% Undervalued
Based on the most followed narrative, Paycom’s fair value of $209.94 sits comfortably above the $165.72 last close. This frames today’s selloff as a potential disconnect.
Automation and AI-driven product innovation, combined with Paycom's unified single database architecture, are driving salesforce productivity gains, increased client satisfaction, and higher client retention rates, which should meaningfully strengthen long-term net margins and future earnings stability.
Want to see how steady revenue gains, rising margins, and a richer earnings profile combine to justify this valuation gap? The full narrative lays out the exact growth runway, the profit lift management is chasing, and the future multiple it believes the market will ultimately pay.
Result: Fair Value of $209.94 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, this bullish setup could unravel if AI tools like IWant become commoditized, or if rising infrastructure costs keep margins from expanding as expected.
Find out about the key risks to this Paycom Software narrative.
Build Your Own Paycom Software Narrative
If you see things differently or want to dig into the numbers yourself, you can build a custom view in just a few minutes: Do it your way.
A great starting point for your Paycom Software research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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