Paycom
| CURRENT PRICE | PROBABILITY-WEIGHTED FAIR VALUE | FAIR VALUE RANGE |
|---|---|---|
| $139.07 | ~$155 | $112 – $195 |
| May 2026 | Bull 25% / Base 50% / Bear 25% | ~11% upside |
Verdict: PAYC trades cheap on EV/EBITDA (7.2x — 81% below its 10-year median)[1] after a Q1 beat ($572M revenue +8%, EPS $3.15 vs. $2.99 cons) and a fresh $2B buyback authorization[2]. FY26 guidance of $2.18-2.20B revenue and $950-970M Adj EBITDA implies 44% EBITDA margins. The market remains skeptical about Beti AI cannibalization and post-Pandemic mid-market employer hiring slowdown. At 16x forward P/E for a 44%-margin software business, the asymmetry favors upside.
CURRENT SNAPSHOT
| Metric | Value | Notes / Source |
|---|---|---|
| Stock price | $139 | [3] |
| Market cap | $6.73B | [2] |
| Q1 2026 revenue | $572M (+8%) | Beat by $7M [4] |
| Q1 2026 EPS | $3.15 | vs cons $2.99 [4] |
| Q1 2026 Adj EBITDA mgn | 48.2% | Strong [4] |
| FY26 revenue guide | $2.175B – $2.195B | [4] |
| FY26 Adj EBITDA guide | $950M – $970M | ~44% margin [4] |
| Forward P/E | 16.3x | vs S&P ~21x [3] |
| EV/EBITDA | 7.2x | 81% below 10-yr median [1] |
| Buyback authorization | $2.0B | Fresh authorization [2] |
BULL / BASE / BEAR SCENARIOS
| Scenario (weight) | Assumptions | Fair Value |
|---|---|---|
| Bull (25%) | Beti AI rebundling drives reaccel to +12%, multiple re-rates to 22x EPS, buyback accretive | $195 |
| Base (50%) | Hit FY26 guide, +8% growth, multiple holds 17x forward | $155 |
| Bear (25%) | Beti cannibalization persists, growth slows to +5%, multiple compresses to 12x | $112 |
| Probability-weighted | Deep-value HCM software; buyback authorization supportive; AI execution swing factor. | ~$155 |
Key Risks
- Beti cannibalization: Self-service tool reducing revenue per employee; debated by management.
- Mid-market hiring: Customer payroll counts drive revenue; macro slowdown is direct headwind.
- Sales execution: Sales force productivity; founder transition has been bumpy.
- Competition: ADP, PCTY, WDAY, RUN compete; price competition possible.
What Would Change Our View
- Upside: Revenue re-acceleration above +9%, Beti monetization clarity, buyback acceleration.
- Downside: Guide cut, EBITDA margin compression below 42%, sales execution misses.
Sources
[1] https://www.gurufocus.com/term/enterprise-value-to-ebitda/PAYC
[3] https://finance.yahoo.com/quote/PAYC/
[4] https://www.sec.gov/Archives/edgar/data/0001590955/000119312526208968/payc-ex99_1.htm
Disclaimer
This output is for informational and research-assistance purposes only. It does not constitute investment, legal, tax, accounting, or other professional advice, and it is not a recommendation to buy, sell, or hold any security. Verify material facts independently and consult qualified advisors before making decisions.