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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 $370.17, marking a +1.54% move from the previous day. This move outpaced the S&P 500's daily gain of 1.53%. Elsewhere, the Dow gained 1.19%, while the tech-heavy Nasdaq added 0.14%.

Coming into today, shares of the maker of human-resources and payroll software had lost 3.53% in the past month. In that same time, the Computer and Technology sector lost 7.62%, while the S&P 500 lost 3.1%.

Investors will be hoping for strength from Paycom Software as it approaches its next earnings release. In that report, analysts expect Paycom Software to post earnings of $1.18 per share. This would mark year-over-year growth of 28.26%. Meanwhile, our latest consensus estimate is calling for revenue of $328 million, up 28.03% from the prior-year quarter.

PAYC's full-year Zacks Consensus Estimates are calling for earnings of $5.76 per share and revenue of $1.36 billion. These results would represent year-over-year changes of +28.57% and +28.4%, respectively.

Investors might also notice recent changes to analyst estimates for Paycom Software. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. Paycom Software is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, Paycom Software is currently trading at a Forward P/E ratio of 63.33. For comparison, its industry has an average Forward P/E of 42.98, which means Paycom Software is trading at a premium to the group.

Meanwhile, PAYC's PEG ratio is currently 2.53. 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 2.65 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 140, which puts it in the bottom 45% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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