저자: 미상 · 외국인
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Paycom(PAYC)은 90% 매출유지율·98% 반복매출의 HCM SaaS로 품질 점수가 높고 무부채다. 최근 성장률은 약 10%로 둔화(연초 대비 18%→10%)됐고 경쟁사 대비 성장 열위가 우려다. 주가는 3년간 50% 이상 하락했으나 밸류에이션 리셋이 이미 상당 부분 반영됐다고 보며, 향후 5년 시장 대비 아웃퍼폼 가능성을 언급했다. 창업자 CEO의 지속 매도, 공동 CEO 퇴임 등은 리스크로 지적했다.
다듬은 글
paycom stock pyc or paycom software stock is around its 52- we low and I personally wouldn't be surprised if we start to see some value investors nibbling on the shares this is one of the few stocks where I'd argue I'd give it the thumbs up because you know you have a history of execution and I'd argue a valuation that's not that bad let's Dive Right In to understand what does paccom do a little bit about their background if you enjoy educational investment videos you're watching unrivaled investing let's Dive Right In to understand what's going on so paycom over the last decade up nearly 900% so an attractive return over the past decade zooming out this has been justified by very strong fundamental execution you could see the steady March of progress with their revenue and their free cash flow these metrics are completely free by the way at AI ticker chat for you to just you know check out any us company that you're interested in you know seeing how they're doing what does pcom do so first you should understand they're servicing tens of thousands of companies customers and those customers have millions of employees nearly 7 million employees and paycom has a 90% annual revenue retention rate so very sticky business 98% of their revenue is recurring in nature and when you understand what does paycom do this is a software as a service a SAS business for human Capital Management payroll Time and Labor Management Talent acquisition so this is about the human resources management that's required to run a company often times you know I'm I'm it honestly brings back some some good and bad memories back when I was the CFO of a uh payments company where you know dealing with this software you got to make sure you get it right sometimes employees enter in the wrong amount of time you know how do you make sure they get the right checks on time you know this can be a major paino but this payroll needs to be the holy grill for companies because employees that's lifeblood for a lot of businesses you can't mess it up so that's the reason why it's so sticky an important you know an important critical software for companies and that's what that's makes the revenue so sticky so if you have a software product that is arguably better than a lot of other products on the market then you steadily take market share over time and that's what they've done that that steady Revenue growth suggests that they've you know they've had an unrivaled value proposition either with better pricing or just better features and so you know and management would argue a bit of both when I look at the quality of the business this is using scor scorecard at AI ticker chat it's not surprising to see it had ranks very highly with several of the key metrics you know this is a company with no debt very strong company viability you know strong Market position you know growing at a very quick you know Strong high rate over time a lot of recurring revenue and yet despite the high scores on quality despite this favorable setup the stock is down over 50% in the last three years cing investors to wonder what's going on so I think it is worthwhile to take a little step back here because I I think there's a couple of things that's going on so this is this is the comp analysis that you can see for paycom this is just looking at their growth and so you can see their most recent quarter they're growing around 10% definitely taking share from the Legacy behemoths like ADP which is still growing at a you know reasonable 6% rate but you do have these smaller competitors that are growing at a faster clip so that is a bit of a red flag on a year-to DAT basis you can see pcom was growing closer to 18% so there is a significant decer deceleration that you know does cause investors to go okay what what's going on here um because especially when you're looking at some of the competitors growing a little bit faster now you know payor for example that's not in the same league I'd argue 600 million in Revenue versus 1.7 billion pelocity it's getting close you know 1.4 billion so I looking at different competitors it is sort of a it's something to watch you know this this is a yellow red flag for me personally as an investor another reason that management has sort of chocked up you know the the underperformance over the last few quarters they've talked about Betty this is the new software that is part of their payroll programs that make it easier for the employees to manage their actual payroll so that way you're less likely to have to run a runoff a one-off payroll because that when you have to say hey I have to do a correction that's really painful for the company and that's arguably where paycom makes better better profits it's these one-time payroll runs versus sort of the automated software and so Betty is to help prevent companies from having errors and so part of the reason why you've seen this deceleration is you know the the one-off payroll runs aren't happening as frequently because of their software improvements at least that was sort of the thesis that was argued a few quarters ago which is that you've had some sort of cannibalization in the business uh where their their onetime fee type of business um you know is is sort of taking a hit um because of better software where the employees can say yeah I'm I'm ensuring the accuracy before the submission you don't have to worry about it you know it's these the numbers are great you don't have to run it again another issue with the stock this was from an article just from a few months ago about how a secret staff meeting revealing big problems suggesting that Chad Richardson he was the CEO and founder that he was sort of ranting this was like a 20-minute rant where he was talking about how he had to skip on his ski vacation come back and work oh poor poor missing those ski vacations smallest violin um and he was saying that look we're we're all you know we all need to step in to help fix our software and that our software is sort of disappointing we need to up our game and so that that is alarming to hear especially given that this a software as a service business uh you know to to hear that rant isn't good argue and I'd say the final most recent development that has gotten investors to be worried about is there was a promotion of Chris Thomas just a few months ago to the co-ceo role with r with Chad Richardson and then just a few months later for personal reasons didn't go into a lot of details he resigned from his position as co-ceo so Chad Richardson Remains the CEO of the company and by the way uh Chris Thomas for his few month tenure as the CEO uh is going to be uh getting a nice severence of over $800,000 now he had been with the company for a few years prior you know in various different roles um but it is worth understanding that no one likes to see this type of Rapid change where you're promoted and then just a few months later you know the CEO the co-ceo is no longer there so what's what's going on with paccom where do I think it can potentially go from here own a stake in pay at at this point and just this past weekend Jordan a member of the unrivaled investing community in our exclusive Discord he wrote and this is a direct quote I have bought both courses on reading financial statements and how to value a stock plus the premium membership and I'm really happy that I did I've learned so much if you're looking for compelling investment ideas or you want to learn how to read financial statements or how to assess the valuation of a business come check out unrivaled investing.com and so when we look at pay I use the AI ticker chat website and the AI predict feature to think about you know quick quick review of you know how could this business perform over time and arguably it likes paycom a lot suggesting that there could be several 100% upside potential if they're able to reinvigorate their growth re accelerate their growth and continue to show let's say profit margin expansion over time and maybe you get some sort of multiple Rebound in the years ahead so if you're able to get all three of those things sort of a effective for the business it could be up several 100% over time looking at analyst expectations I mean it is worthwhile even if you ignore some of the you know the the previous AI predict chart if you look at analyst expectations which is these three different lines you know either way you're really talking about a business that over the next two to three years Wall Street analysts are expecting around $10 per share so even if you don't think AI could be right with its sort of wide range of possibilities you know Wall Street is effectively saying around $10 for a very sticky stable business you know company trading around $145 per share so you know 14 times forward earnings a few years out you know is that really super expensive for something that should be very sticky now one reason another reason that I'd argue that the stock has not done well is that you see this cons continued Insider sales by the founder Chad Richardson you know selling you know hundreds of thousands of dollars of stock even as the stock continues to drop lower so I I don't really care for that I would rather he just sell something larger in bulk and then say hey closer to X dollar per share he just doesn't there's a certain threshold where he doesn't you know cross that said as the founder CEO of the business he still is one of the largest shareholders owning millions of do millions of shares and so you know this this has done very well for him he's still one of the largest shareholders of the company I think you know he he even despite the the the recent share sales he's still arguably the largest shareholder thinking about my own personal hypothetical valuation framework for uh paycom where does it go in the years ahead earlier today was around $145 per share around $8 billion market cap honestly as I think about this business it would not surprise me if you have someone like a bill Amman get interested because you have the stability of the business you have the founder alignment you have the free cash flow and he's been more willing in the past to pay valuation multiples that I might not be comfortable with like you know he he he's comfortable with the 20 to 30 times you know I I I'll do that but he he he'll be making the big big bets on something like that and so I look at this and once again hypothetical framework of course stock price can go way higher or lower but if there's just even continued execution around their current levels and profits currently effectively around their current levels you're talking about really a 20 maybe High Teens earnings multiple for a company that's growing you know let's say around 10% a year say in the years ahead somewhere between 8 and 12% assume they're able to continue growing in line with let's say ADP the economy and assuming let's say a market multiple of around 20 times you know then you could do fairly well you know for the stock based on the cash flow that gradually gets returned to as a shareholder whether or not it's via dividends or BuyBacks and so I I look at this and I over the next five years you know and this is this is why I think pcom could could let's say outperform let's say the S&P 500 over the next five years is I think it's the what happened in the last three years there's a few things that happened you had a series of of events that disappointed investors and previously this was a sort of like a wonderin we like this is incredible look at their growth they're capturing market share each year I think you've had a valuation reset in the last three years despite the continued expansion in the business so that reset it's unlikely in my opinion to see another 50% drop with this business unless there's like unless there's like cockroaches in the kitchen you know if there's some big problem with Chad Richardson that he's hiding and then he's there's some fraud I don't think that's happening personally uh I'd be surprised if that if that's how that plays out especially because he still has a sizable amount of skin in the game it's not like he's sold out he's selling a little bit at a time but he still has a lot of skin in the game and so I you know I look at this and I'm thinking to myself the pain in terms of reassessing saying hey this company's no longer growing at 20 to 30% a year now it's growing closer to 10% a year that pain with the valuation that is what happened over the last years that's the reason why the stock price is down over 50% but that's unlikely to happen again over the next 5 years because you know is this valuation really going to go from let's say 20 times to 10 times for a business where you have 98% recurring Revenue your customer base is very sticky you know this is a critical piece of software for businesses so I think you have that aspect you know sort of in the rear view mirror yes there are some challenges clearly you know there's internal internally they're upset with their software where they feel like hey maybe it's not good enough or or you know their execution where there are other players growing faster than them that is a yellow flag it's not necessarily saying like hey that they're about to Lo completely lose their business but it is you know an indication that there is tougher competition that could always lead to either slower sales or Worse margins so that is worth understanding I think another aspect is that maybe the Market's saying hey there there could be an uptake or even a recession if there's a recession maybe people you know there isn't as much of a need for payroll uh you know software as much of a need I should say because you know if the unemployment ticks up then you know if your people out of a job you have you have less need to say hey I'm we need this software to cover this many seats uh this many people so I mean there are those types of Dynamics maybe that's part of what the Market's starting to price in uh so I I I think it's really those are the key elements you know maybe it's tougher competition a valuation reset maybe expectations of you know unemployment you know going from what has historically been very low sub 4% to maybe a couple percent in the future and that being a headwind for the business uh so overall I look at this and once again would not be surprised if this outperforms the broader markets over time I have not personally pulled the trigger partly because I don't like seeing a Founder CEO uh selling stock even when it's near its 52e low that said it once again it wouldn't surprise me if this does quite well in these years ahead given the combination you got this free cash flow going to you have the stability of the business you have you probably should continue to grow let's say even in line with the market 5 to 10% a year plus the free cash flow of the business of let's say another 5% that could result in an very adequate return potentially for shareholders if they deliver if this video going through paycom has been helpful for you please make a personally I haven't pulled the trigger yet partly because I just think I'm finding more compelling investment ideas which I do call out to my subscribers at unrivaled investing thanks so much for tuning in
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