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If you’re wondering if Paycom Software is starting to look like value after a rough patch, read this article to find out what the current share price could imply.
The stock last closed at $125.31, with returns of a 4.3% seven-day decline, a 30-day decline of 18.9%, a 17.8% decline this year and a 39.7% decline over the past year. This raises questions about how the risk and reward now stack up for new and existing investors.
Recent headlines surrounding Paycom have focused on the company’s position in payroll and human capital management software and how it is responding to competition and changing customer needs. This news provides useful context for understanding why sentiment and the stock price have changed in recent years, including the 57.9% decline over three years and a 68.0% decline over five years.
Against that backdrop, Paycom currently has a Valuation Score of 5 out of 6. We’ll break this down using different valuation methodologies and end with a way of looking at valuation that ties the numbers together more clearly for long-term investors.
Find out why Paycom Software’s -39.7% return over the past year lags its peers.
A Discounted Cash Flow or DCF model estimates what a company could be worth today by projecting its future cash flows and then discounting them back to a present value.
For Paycom Software, the model used is a 2-phase free cash flow to equity approach, based on cash flows in $. The company’s trailing twelve-month free cash flow is approximately $434.9 million. Analysts provide detailed multi-year forecasts, and Simply Wall St extrapolates further, with an expected free cash flow of $698.0 million in 2030 and a range of annual projections discounted to today.
Adding these discounted cash flows together yields an estimated intrinsic value of approximately $314.75 per share. Compared to the recent share price of $125.31, the model implies an intrinsic discount of 60.2%, suggesting the stock is considered materially undervalued under this DCF view.
Result: UNDERVALUE
Our Discounted Cash Flow (DCF) analysis shows that Paycom Software is 60.2% undervalued. Keep track of this in your watchlist or portfolio, or discover 53 more undervalued, high-quality stocks.
PAYC discounted cash flow as of February 2026
To learn more about how we arrive at this fair value for Paycom software, visit the Valuation section of our company report.
For a profitable company like Paycom Software, the price-to-earnings ratio is a useful way to relate what you pay per share to the revenue the company is currently generating. It gives a quick idea of how much the market is willing to pay for each dollar of profit.
What counts as a ‘normal’ price-earnings ratio will vary depending on growth expectations and risk. Higher expected earnings growth or lower perceived risk may justify a higher price-to-earnings ratio, while slower growth or higher risk typically comes with a lower price-to-earnings ratio.
Paycom’s current price-to-earnings ratio is 15.17x. This is below the professional services industry average of 19.40x and also below the peer average of 18.45x. Simply Wall St’s Fair Ratio for Paycom is 22.93x. This Fair Ratio is a proprietary estimate of the price-to-earnings ratio that could be meaningful given factors such as the company’s earnings growth profile, profit margins, size, industry and specific risks.
Compared to simple peer or sector comparisons, the Fair Ratio aims to be more tailored as it adapts to Paycom’s characteristics rather than assuming all companies should trade at similar multiples. Because the current price-to-earnings ratio of 15.17x is below the Fair Ratio of 22.93x, the stock appears undervalued in this price-to-earnings ratio.
Result: UNDERVALUE
NYSE:PAYC price/earnings ratio as of February 2026
P/E ratios tell one story, but what if the real opportunities lie elsewhere? Start investing in legacies, not executives. Discover our 23 top companies led by the founders.
Previously we mentioned that there’s an even better way to understand valuation, and on Simply Wall St that comes through Narratives, where you connect a clear story about Paycom Software to your own numbers for future earnings, revenue, margins and a fair value, and then see how that compares to the current price. A story simply means saying, “Here’s how I think this business is playing out” and tying that story directly to a forecast and a fair value, all in a simple tool on the Community page that millions of investors already use. Because the stories are on the platform, they can be refreshed as new revenue, news, or guidance comes in, so your view isn’t frozen. For Paycom specifically, one story could look closer to a fair value of around US$260.61 with higher growth and margin assumptions, while another could anchor closer to around US$165.00 with more cautious revenue and price-to-earnings expectations. Looking at the two side by side can help you decide whether the current price looks attractive, full-priced or expensive based on your own beliefs rather than on a single model.
Do you think there is more to the story for Paycom Software? Check out our community to see what others are saying!
NYSE:PAYC 1-year stock price chart
This article from Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. We aim to provide you with targeted, long-term analysis based on fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Simply Wall St has no positions in the stocks mentioned.
Companies discussed in this article include PAYC.
Do you have feedback on this article? Worried about the content? Please contact us directly. You can also send an email to [email protected]
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