Let’s talk about the popular Paycom Software, Inc. (NYSE:PAYC). The company’s shares have seen a significant increase of 47% in recent months on the NYSE. The company is now trading at an annual high after the recent share price rise. With many analysts covering large-cap stocks, we would expect price-sensitive announcements to already be factored into the stock price. But what if the stock is still a bargain? Let’s take a closer look at Paycom Software’s valuation and prospects to determine if it’s still a bargain.
Check out our latest analysis for Paycom Software
The stock currently appears reasonably valued according to our valuation model. It’s trading about 3.7% below our intrinsic value, which means if you buy Paycom Software today, you’ll be paying a fair price for it. And if you believe the company’s true value is $243.39, then there isn’t much room for the stock price to grow beyond what it’s currently trading. Is there an opportunity to buy low in the future? Since Paycom Software’s share price is quite volatile, we could potentially see it fall lower (or rise higher) in the future, giving us another opportunity to buy. This is based on its high beta, which is a good indicator of how much the stock is moving relative to the rest of the market.
Future prospects are an important aspect when buying stocks, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. Paycom Software’s earnings growth is expected to be in the teens over the next few years, indicating a solid future ahead. This should lead to robust cash flows, which would lead to a higher share value.
Are you a shareholder? PAYC’s optimistic future growth appears to have been factored into the current share price, with shares trading around their fair value. However, there are also other important factors that we have not taken into account today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Do you have enough confidence to invest in the company if the price falls below fair value?
Are you a potential investor? If you’ve been keeping an eye on PAYC, now may not be the best time to buy as it trades around its fair value. However, the positive outlook is encouraging for the company, meaning it’s worth diving deeper into other factors, such as balance sheet strength, to take advantage of the next price drop.
