Is It Time To Reassess Paycom Software (PAYC) After Years Of Share Price Weakness?

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If you’re wondering whether Paycom Software’s current stock price reflects its true value, you’re not alone. This article focuses on what the numbers say about value rather than short-term sentiment.
The stock last closed at $147.48, after returns of a 6.4% 7-day decline, a 9.4% 30-day decline, a 3.2% year-to-date decline and a 29.0% decline over the past year, with a 53.0% decline over 3 years and 61.6% over 5 years.
This price development comes against the backdrop of continued interest in Paycom Software’s role in commercial services, as investors assess how its payroll and HR software fits into longer-term business spending priorities. At the same time, the stock remains part of broader discussions about software valuations in the US market, which could impact how quickly sentiment around individual names like Paycom Software changes.
In our checks, Paycom Software currently has a valuation score of 6 out of 6. We’ll unpack this score using several standard approaches before ending with a different way of thinking about value that can add a new layer to your analysis.

Find out why Paycom Software’s -29.0% year-to-date return lags its peers.

A Discounted Cash Flow model takes projected future cash flows and then discounts them back to today to estimate what the company could be worth today.

For Paycom Software, the model uses a 2-phase approach from free cash flow to equity. Trailing twelve-month free cash flow is approximately $409.8 million. Analysts provide the input for the beginning of the year, and Simply Wall St further expands on these projections, including an estimate of free cash flow of $904.0 million in 2030. Projections for intermediate years between 2026 and 2035 are also included and discounted to today using this framework.

Adding these cash flows together, the DCF model arrives at an estimated intrinsic value of approximately $411.97 per share. Compared to the recent share price of $147.48, this indicates the stock is trading at a 64.2% discount to the DCF estimate, suggesting that Paycom Software appears materially undervalued based on this cash flow statement alone.

Result: UNDERVALUE

Our Discounted Cash Flow (DCF) analysis shows that Paycom Software is 64.2% undervalued. Follow this in your watchlist or portfolio, or discover 874 more undervalued stocks based on cash flows.

PAYC discounted cash flow as of January 2026

To learn more about how we arrive at this fair value for Paycom software, visit the Valuation section of our company report.

For profitable companies, the price-to-earnings ratio is a simple way to link what you pay for each share to the profit each share represents. It helps you see how many dollars of stock price the market is pegging to each dollar of current earnings.

What counts as a ‘normal’ price-to-earnings ratio depends greatly on how quickly earnings are expected to grow and how risky those earnings are. Higher growth or lower perceived risk often supports a higher price-to-earnings ratio, while lower growth or higher risk usually justifies a lower price-to-earnings ratio.

Paycom Software currently trades at a price-to-earnings ratio of 17.87x. That is below the average price-to-earnings ratio in professional services of 24.13x and also below the peer group average of 20.43x. Simply Wall St’s fair ratio for Paycom software is 24.16x. This is her own view on what the price-to-earnings ratio could be, given factors such as earnings growth profile, profit margins, sector, market capitalization and specific risks.

This Fair Ratio can be more informative than a simple comparison with peers or the sector, because it adapts to the company’s own characteristics rather than assuming ‘one size fits all’. Based on this, Paycom Software’s current price-to-earnings ratio of 17.87x is below its Fair Ratio of 24.16x, indicating that the stock may be undervalued on this metric.

Result: UNDERVALUE

NYSE:PAYC price/earnings ratio as of January 2026

P/E ratios tell one story, but what if the real opportunities lie elsewhere? Discover 1444 companies where insiders are betting on explosive growth.

We’ve said before that there’s an even better way to understand valuation. That’s why we introduce you to Narratives, which simply means adding your own story about a company to the numbers you see on the screen.

A story is your vision of how a company could develop, translated into specific expectations for future sales, profits and profit margins, which then align with an assumed fair value per share.

On Simply Wall St, Narratives are a simple tool on the Community page that allows you to connect Paycom Software’s story to a financial forecast and then to a fair value. This allows you to compare that fair value to the current stock price and decide whether you find the stock attractive, fully priced, or expensive.

Because the stories on the platform are automatically updated when new information, such as company news or earnings, is added, two investors looking at Paycom Software could reasonably have very different stories. One person may determine a higher fair value based on stronger long-term assumptions, while another may use more conservative inputs that lead to a lower fair value estimate.

Do you think there is more to the story for Paycom Software? Check out our community to see what others are saying!

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.

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