Paycom Software offers cloud-based human capital management software solutions delivered as Softwareas-a-Service in the United States. It provides functionality and data analytics that businesses need to manage the complete employment life-cycle from recruitment to retirement. The company was founded in 1998 and is based in Oklahoma City, Oklahoma.
PAYC Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Paycom Software Inc with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Paycom Software Inc ranked in the 54th percentile in terms of potential gain offered. More precisely, our analysis suggests the stock is undervalued by approximately 77.67% on a DCF basis. The most interesting components of our discounted cash flow analysis for Paycom Software Inc ended up being:
Interest coverage, a measure of earnings relative to interest payments, is 241.52 -- which is good for besting 96.83% of its peer stocks (US stocks in the Technology sector with positive cash flow).
The business' balance sheet reveals debt to be 0% of the company's capital (with equity being the remaining amount). Approximately just 3.32% of US stocks with free cash flow have a lower reliance on debt in their capital structure.
PAYC's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than 66.18% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
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