Paycom Software Stock Rally Driven By Strong Sales Growth

PAYC: Paycom Software logo
PAYC
Paycom Software

Paycom Software Inc. (NYSE: PAYC) stock price jumped more than 2.5x from $122 in 2018 end, to around $326 currently, primarily due to favorable changes in its revenues. The company, an online payroll and human resource technology provider, actually witnessed a rise in its P/S multiple, too, and this helped further drive a rise in the company’s stock price. Due to this, the stock managed to strongly outperform the S&P, which has risen a little over 55%, in comparison, over this period.

In our interactive dashboard, Why Paycom Software Stock Moved: PAYC Stock Has Gained 166% Since 2018, we break down the factors behind this move.

(A) Paycom’s Total Revenue jumped 2x from $566 million in FY 2018 to $1.14 billion currently

  • Paycom’s total revenue has risen strongly from $566 million in FY ’18 to $1.06 billion in FY ’21 and currently stands even higher at $1.14 billion.
  • As of FY ’21, the firm operates across a single operating segment, which has seen consistent growth each year since FY 2018.
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(B) Revenue per share (RPS) increased 2x from $9.81 in FY ’18 to $19.64 currently

  • Paycom revenue rose consistently from $566 million in FY ’18 to $1.14 billion currently, while the outstanding share count increased marginally from 57.7 million in FY ’18 to 57.9 million currently.
  • Due to this, RPS has risen from $9.81 in FY ’18 to $19.64 currently.

(C) Price-To-Sales (P/S) multiple for Paycom jumped from 12.5x in 2018-end to over 30x by 2020 end but has pulled back to 16.6x currently, still around 30% higher than its 2018 level

  • Due to Paycom’s stellar performance since 2018-end, its P/S multiple rose strongly from 12.5x in 2018-end to as high as 30.2x by late 2020.
  • However, due to the increased economic uncertainty weighing on the broader markets, the P/S multiple has pulled back, currently standing at around 16.6x, still 30% higher than its 2018 level.
  • For additional details about the company’s stock returns and comparison to peers, see Paycom Software (PAYC) Stock Return Comparison.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Jul 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 PAYC Return 15% -23% 606%
 S&P 500 Return 3% -18% 74%
 Trefis Multi-Strategy Portfolio 6% -18% 221%

[1] Month-to-date and year-to-date as of 7/8/2022
[2] Cumulative total returns since the end of 2016

 

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