Is Now The Right Time To Watch Paycom Software After Recent Product Launch Updates?

Ever wondered if Paycom Software is a bargain hiding in plain sight? You will find out if now is the right time to keep this stock on your radar.
The stock has climbed 2.4% in the past week but is still down 17.5% year-to-date, leaving investors guessing about its comeback story or ongoing risks.
News around Paycom Software has included notable product launches and partnerships, which might be influencing recent price fluctuations. These updates hint at new growth streams and a potential shift in how the market views the company’s prospects.
By our numbers, Paycom Software achieves a 6/6 valuation score, signaling it is undervalued on every check we run. Let us break down how we arrive at that result using different valuation methods, and stick around because we will reveal an insider tip for seeing value beyond the numbers at the end of this article.

Find out why Paycom Software’s -24.0% return over the last year is lagging behind its peers.

The Discounted Cash Flow (DCF) model estimates a stock’s intrinsic value by predicting its future cash flows and discounting 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 out to 10 years using reasonable growth assumptions.

Currently, Paycom Software generates $409.8 million in free cash flow. Analyst consensus sees this growing annually, forecasting $783 million by 2029. The ten-year projection ultimately reaches about $1.13 billion, though anything beyond 2029 is extrapolated rather than strictly analyst-derived. All these figures are in dollars.

After discounting these future cash flows to the present, the estimated intrinsic value for Paycom Software lands at $376.73 per share. Based on the latest prices, this valuation implies the stock is around 55.9% undervalued. In other words, if these projections are accurate, Paycom’s current share price has substantial room to move upward from today’s level.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Paycom Software is undervalued by 55.9%. Track this in your watchlist or portfolio, or discover 879 more undervalued stocks based on cash flows.

PAYC Discounted Cash Flow as at Nov 2025

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Paycom Software.

The Price-to-Earnings (PE) ratio is a widely used metric for valuing profitable companies like Paycom Software, because it measures how much investors are willing to pay today for a dollar of earnings. It is particularly useful when a company consistently generates profits, as in Paycom’s case, since price alone says little about performance without considering the underlying earnings power.

Growth expectations and risk profiles significantly influence what investors consider a “fair” PE ratio. Higher growth prospects or lower risk can justify a higher PE, while slower growth or higher risk typically lead to lower valuations. Comparing Paycom Software’s current PE ratio of 20x with 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 factoring in Paycom’s earnings growth, profit margins, market capitalization, industry 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 to the company’s fundamentals.

This customized approach is more insightful than relying simply on industry or peer averages, since those do not account for unique growth and risk characteristics. Comparing the Fair Ratio (24x) with Paycom’s actual PE (20x) suggests that the stock is trading below its fair value, meaning it could be undervalued by this measure.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1405 companies where insiders are betting big on explosive growth.

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative connects your view of a company’s story—its strengths, risks, and future potential—to your own financial forecast and fair value estimation. Instead of relying solely on historic data or preset models, Narratives empower you to express your assumptions about Paycom Software’s future revenue, earnings, and margins, creating a personal “story behind the numbers.” On Simply Wall St’s Community page, used by millions of investors, Narratives make this process intuitive and accessible for everyone.

This tool lets you visually link your forecast and perspective to a dynamic fair value, helping you decide whether the current stock price offers opportunity or caution. Whenever fresh news or earnings reports arrive, Narratives update automatically to reflect the latest information, keeping your viewpoint current. For example, some investors’ Narratives on Paycom Software price in rapid AI-driven growth and see a fair value as high as $310, while more cautious users highlight industry headwinds and set a fair value closer to $208. Narratives make it easy to see the reasoning behind these differences—and to build your own, based on what you believe is most likely for the business.

Do you think there’s more to the story for Paycom Software? Head over to our Community to see what others are saying!

NYSE:PAYC Community Fair Values as at Nov 2025

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include PAYC.

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