Paycom Software (PAYC) Stock Sinks As Market Gains: What You Should Know

Paycom Software (PAYC) closed at $262.07 in the latest trading session, marking a -1.29% move from the prior day. This move lagged the S&P 500's daily gain of 0.29%. At the same time, the Dow added 0.11%, and the tech-heavy Nasdaq gained 0.44%.

Coming into today, shares of the maker of human-resources and payroll software had gained 19.59% in the past month. In that same time, the Computer and Technology sector gained 1.17%, while the S&P 500 gained 1.51%.

Investors will be hoping for strength from PAYC as it approaches its next earnings release. In that report, analysts expect PAYC to post earnings of $0.77 per share. This would mark year-over-year growth of 26.23%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $189.66 million, up 26.16% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $3.42 per share and revenue of $733.46 million. These totals would mark changes of +28.09% and +29.51%, respectively, from last year.

Any recent changes to analyst estimates for PAYC should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. PAYC is currently a Zacks Rank #3 (Hold).

Digging into valuation, PAYC currently has a Forward P/E ratio of 77.69. Its industry sports an average Forward P/E of 58.89, so we one might conclude that PAYC is trading at a premium comparatively.

We can also see that PAYC currently has a PEG ratio of 2.83. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Internet - Software stocks are, on average, holding a PEG ratio of 2.84 based on yesterday's closing prices.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 94, putting it in the top 37% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

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