Have you ever wondered if Paycom Software is a bargain hiding in plain sight? You’ll find out if now is the right time to keep this stock on your radar.
The stock is up 2.4% in the past week, but is still down 17.5% this year, leaving investors guessing about the comeback story or lingering risks.
The news surrounding Paycom Software includes notable product launches and partnerships, which could influence recent price fluctuations. These updates point to new growth streams and a possible shift in the way the market views the company’s prospects.
According to our numbers, Paycom Software achieves a valuation score of 6/6, indicating that it is undervalued in every check we perform. Let’s break down how we get to that result using different valuation methods, and stick with it, because at the end of this article we’ll reveal an insider tip for seeing value beyond the numbers.
Find out why Paycom Software’s -24.0% year-to-date return lags its peers.
The Discounted Cash Flow (DCF) model estimates the intrinsic value of a stock by predicting future cash flows and converting them back to today’s dollars. For Paycom Software, analysts first project free cash flow (FCF) for the next five years. Simply Wall St then extends these forecasts to ten years based on reasonable growth assumptions.
Currently, Paycom Software generates $409.8 million in free cash flow. The consensus among analysts sees this increasing annually, predicting $783 million in 2029. The ten-year projection ends up being around $1.13 billion, although everything beyond 2029 is extrapolated rather than strictly analyst inferred. All these figures are in dollars.
After discounting these future cash flows to the present, the estimated net asset value for Paycom Software is $376.73 per share. Based on the latest prices, this valuation implies that the stock is approximately 55.9% undervalued. In other words, if these projections hold true, Paycom’s current share price has significant room to move higher from current levels.
Result: UNDERVALUE
Our Discounted Cash Flow (DCF) analysis shows that Paycom Software is 55.9% undervalued. Follow this in your watchlist or portfolio, or discover 879 more undervalued stocks based on cash flows.
PAYC discounted cash flow as of November 2025
To learn more about how we arrive at this fair value for Paycom software, visit the Valuation section of our company report.
The price-to-earnings ratio (PE) is a commonly used metric for valuing profitable companies like Paycom Software because it measures how much investors are willing to pay for a dollar of earnings today. It is particularly useful when a company consistently generates profits, as in the case of Paycom, because price alone says little about performance without considering underlying earnings power.
Growth expectations and risk profiles have a significant impact on what investors consider a ‘fair’ price-to-earnings ratio. Higher growth prospects or lower risk may justify a higher price-to-earnings ratio, while slower growth or higher risk typically lead to lower valuations. Comparing Paycom Software’s current price-to-earnings ratio of 20x to the professional services industry average of 24x and the peer average of 25x, the stock appears modestly cheaper on this metric alone.
However, Simply Wall St’s proprietary “Fair Ratio” approach offers a more tailored perspective. By taking into account Paycom’s earnings growth, profit margins, market capitalization, sector context and risks, the Fair Ratio estimates what would be a justified multiple for the stock. For Paycom Software, the Fair Ratio is 24x, which closely aligns with broad market benchmarks but is individualized based on the company’s fundamentals.
This tailored approach provides more insight than simply relying on industry or peer averages, which do not take into account unique growth and risk characteristics. Comparing the Fair Ratio (24x) to Paycom’s actual price-to-earnings ratio (20x) suggests the stock is trading below its fair value, meaning it could be undervalued by this measure.
Result: UNDERVALUE
NYSE:PAYC PE ratio as of November 2025
P/E ratios tell one story, but what if the real opportunities lie elsewhere? Discover 1,405 companies where insiders are betting on explosive growth.
We’ve said before that there’s an even better way to understand appreciation, so let’s introduce you to Narratives. A story connects your vision of a company’s story (its strengths, risks, and future opportunities) to your own financial forecast and fair value estimate. Rather than relying solely on historical data or preset models, Narratives allows you to express your assumptions about Paycom Software’s future revenues, earnings and margins, creating a personalized ‘story behind the numbers’. On the Simply Wall St community page, used by millions of investors, Narratives make this process intuitive and accessible to everyone.
This tool allows you to visually link your forecast and perspective to a dynamic fair value, helping you decide whether the current stock price represents opportunity or caution. When new news or earnings reports come in, stories are automatically updated to reflect the latest information, keeping your point of view current. For example, some investors’ accounts of Paycom Software tout rapid AI-driven growth and see a fair value as high as $310, while more cautious users highlight industry headwinds and peg a fair value closer to $208. Stories make it easy to see the reasoning behind these differences, and to build your own reasoning based on what you think is most likely for the company.
Do you think there is more to the story for Paycom Software? Check out our community to see what others are saying!
NYSE:PAYC Community Fair Values as of November 2025
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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