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

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Paycom Software (PAYC - Free Report) closed the most recent trading day at $222.45, moving +1.48% from the previous trading session. This move outpaced the S&P 500's daily gain of 1.05%. Elsewhere, the Dow gained 1.02%, while the tech-heavy Nasdaq added 1.66%.

Heading into today, shares of the maker of human-resources and payroll software had gained 7% over the past month, outpacing the Computer and Technology sector's loss of 3.49% and the S&P 500's loss of 0.08% in that time.

Investors will be hoping for strength from PAYC as it approaches its next earnings release. In that report, analysts expect PAYC to post earnings of $0.71 per share. This would mark year-over-year growth of 20.34%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $163.73 million, up 27.12% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $3.31 per share and revenue of $718.77 million. These totals would mark changes of +23.97% and +26.92%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for PAYC. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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.

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. Within the past 30 days, our consensus EPS projection remained stagnant. PAYC is holding a Zacks Rank of #3 (Hold) right now.

Digging into valuation, PAYC currently has a Forward P/E ratio of 67.25. For comparison, its industry has an average Forward P/E of 60.35, which means PAYC is trading at a premium to the group.

Also, we should mention that PAYC has a PEG ratio of 2.67. 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. PAYC's industry had an average PEG ratio of 2.67 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 83, which puts it in the top 33% 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.

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