Stock of the week: “Paycom Software Inc”
Released on the 23rd of May 2023
Paycom Software, Inc. engages in the provision of cloud-based human capital management (HCM) software solutions delivered as Software-as-a-Service. It offers functionality and data analytics that businesses need to manage the complete employment life cycle from recruitment to retirement. Its solutions include talent acquisition, time and labor management, payroll, talent management, and human resource management (1).
The recent earnings call showed positive results, with a 28% year-over-year revenue growth, primarily from recurring sources. Paycom has a strong balance sheet with $506 million in cash and only $29 million in debt. The company also provided guidance for 25% revenue growth for the full year 2023 (2).
One notable growth prospect discussed during the earnings call is Paycom's expansion into the international market. While the company already serves companies with international operations, entering the global market presents a significant opportunity for growth.
Paycom holds a competitive position in the payroll and human resources management software market, although it still has room to catch up to incumbents like Automatic Data Processing (ADP). However, the market is highly fragmented, providing an opportunity for Paycom as a top-tier offering (3).
Professional social media sentiment is “neutral” in both absolute and relative terms, on its own and when compared to the social media sentiment of the sector and stock index.
Analyst consensus is to "buy" the stock - out of the 22 bank analysts covering the company, 17 recommend buying the stock, 4 recommend holding it, and 1 suggests selling it. The median upside potential of the stock price these analysts expect over the next 6-12 months is currently 26.4% (reference close of business 22/05/2023).
Attention buzz is currently “low”.
(3)https://seekingalpha.com/article/4606342-paycom-software-core-holding-dividend-initiation
