Paycom Software, Inc. (PAYC)

FairStock Score: 63/100 — STEADY

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

I am wary of paying a premium for a good business unless the growth and returns justify it. Paycom’s cloud HCM offering has real virtues: in fiscal Q2 2026, the quarter ended 2026-06-30, revenue was $531.2 million versus $483.6 million in fiscal Q2 2025, and net income rose to $107.4 million from $89.5 million. TTM free cash flow of $570.6 million, a 4.7% FCF yield, and a FairStock ROE calculation of 41.09% show a profitable, cash-generative model. The Lynch category is FAST GROWER, based on 25.9% annual profit growth and 19.5% revenue growth over five years. But the current price close of $268.25 on 2026-10-26 carries a FairStock P/E of 28.36 and P/B of 20.41. The Graham Number is $52.40, leaving a -424.03% margin of safety, and the PEG is 138.24. Those are not Graham bargains. Growth is also uneven: fiscal FY2025 revenue was $2.1 billion versus $1.9 billion in FY2024, but net income fell to $453.4 million from $502.0 million, and diluted EPS fell to $8.08 from $8.92. ROCE is only 8.78%, debt-to-equity is 1.72, and Piotroski is 4/9. The business quality is better than the accounting score, but the price already assumes durable growth. I would want a wider margin of safety or clear reacceleration before calling it attractive.

In plain English: Paycom sells cloud software that helps small and mid-sized companies manage payroll and other employee tasks. The business is profitable and generates cash, but sales growth has slowed and profits have been uneven. At $268.25, the price looks expensive compared with the company’s current profits and accounting value.

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Data as of 2026-10-26 close · note generated 2026-10-28 · model deepseek-flash

Sources (SEC EDGAR): fiscal Q2 2026 10-Q (period ended 2026-06-30) · fiscal Q1 2026 10-Q (period ended 2026-03-31) · fiscal Q3 2025 10-Q (period ended 2025-09-30) · fiscal Q2 2025 10-Q (period ended 2025-06-30) · FY2025 10-K (period ended 2025-12-31) · FY2024 10-K (period ended 2024-12-31) · FY2023 10-K (period ended 2023-12-31)

Fundamentals from company filings and market-data providers; prices are end-of-day, not real-time. AI-generated analysis is general and educational — not personal investment advice. Scoring methodology · Score test · Disclaimer