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Paycom Software (PAYC) Outpaces Stock Market Gains: What You Should Know

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In the latest trading session, Paycom Software (PAYC - Free Report) closed at $537.32, marking a +1.13% move from the previous day. This move outpaced the S&P 500's daily gain of 0.98%.

Heading into today, shares of the maker of human-resources and payroll software had gained 7.34% over the past month, outpacing the Computer and Technology sector's loss of 0.2% and the S&P 500's gain of 2.57% in that time.

PAYC will be looking to display strength as it nears its next earnings release, which is expected to be November 2, 2021. On that day, PAYC is projected to report earnings of $0.91 per share, which would represent year-over-year growth of 30%. Meanwhile, our latest consensus estimate is calling for revenue of $250.37 million, up 27.39% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $4.39 per share and revenue of $1.04 billion, which would represent changes of +25.79% and +23.31%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for PAYC. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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. The Zacks Consensus EPS estimate has moved 0.45% lower within the past month. PAYC is currently a Zacks Rank #3 (Hold).

In terms of valuation, PAYC is currently trading at a Forward P/E ratio of 120.95. This represents a premium compared to its industry's average Forward P/E of 69.43.

We can also see that PAYC currently has a PEG ratio of 4.84. 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. Internet - Software stocks are, on average, holding a PEG ratio of 4.67 based on yesterday's closing prices.

The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 168, which puts it in the bottom 34% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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