Is It Time To Reassess Paycom Software (PAYC) After A 40% Share Price Slide?

Simply Wall St

Sun, February 15, 2026 at 2:11 AM GMT+9 5 min read

In this article:

PAYC

+4.63%

Track your investments for FREE with Simply Wall St, the portfolio command center trusted by over 7 million individual investors worldwide.

If you are wondering whether Paycom Software is starting to look like value after a tough stretch, this article will walk through what the current share price might be implying.

The stock last closed at US$125.31, with returns of a 4.3% decline over 7 days, an 18.9% decline over 30 days, a 17.8% decline year to date and a 39.7% decline over the past year. This raises questions about how the risk and reward now stack up for new and existing investors.

Recent headlines around Paycom have focused on the company’s position in the payroll and human capital management software space and how it is responding to competition and changing customer needs. This news gives useful context for understanding why sentiment and the share price have shifted over the last several years, including the 57.9% decline over 3 years and 68.0% decline over 5 years.

Against that backdrop, Paycom currently holds a valuation score of 5 out of 6. We will unpack this using different valuation methods, then finish with a way to look at valuation that ties the numbers together more clearly for long term investors.

Find out why Paycom Software’s -39.7% return over the last year is lagging behind its peers.

Approach 1: Paycom Software Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a business could be worth today by projecting its future cash flows and then discounting those back to a present value.

For Paycom Software, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash flows in $. The company’s latest twelve month free cash flow is about $434.9 million. Analysts provide detailed forecasts for several years, and Simply Wall St extrapolates beyond that, with projected free cash flow of $698.0 million in 2030 and a series of annual projections that are discounted back to today.

Adding these discounted cash flows together produces an estimated intrinsic value of about $314.75 per share. Compared with the recent share price of $125.31, the model implies an intrinsic discount of 60.2%, which indicates that the shares screen as materially undervalued on this DCF view.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Paycom Software is undervalued by 60.2%. Track this in your watchlist or portfolio, or discover 53 more high quality undervalued stocks.

PAYC Discounted Cash Flow as at Feb 2026

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

Story Continues  

Approach 2: Paycom Software Price vs Earnings (P/E)

For a profitable company like Paycom Software, the P/E ratio is a useful way to relate what you are paying per share to the earnings the business is currently generating. It gives a quick sense of how much the market is willing to pay for each dollar of profit.

What counts as a “normal” P/E will vary with growth expectations and risk. Higher expected earnings growth or lower perceived risk can justify a higher P/E, while slower growth or higher risk typically lines up with a lower P/E.

Paycom’s current P/E is 15.17x. This is below the Professional Services industry average of 19.40x and also below the peer average of 18.45x. Simply Wall St’s Fair Ratio for Paycom is 22.93x. This Fair Ratio is a proprietary estimate of what P/E might make sense given factors such as the company’s earnings growth profile, profit margins, size, industry and specific risks.

Compared with simple peer or industry comparisons, the Fair Ratio aims to be more tailored, since it adjusts for the characteristics of Paycom rather than assuming all companies should trade at similar multiples. With the current P/E of 15.17x below the Fair Ratio of 22.93x, the stock appears undervalued on this P/E view.

Result: UNDERVALUED

NYSE:PAYC P/E Ratio as at Feb 2026

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 23 top founder-led companies.

Upgrade Your Decision Making: Choose your Paycom Software Narrative

Earlier we mentioned that there is an even better way to understand valuation, and on Simply Wall St that comes through Narratives, where you pair a clear story about Paycom Software with your own numbers for future revenue, earnings, margins and a fair value, then see how that stacks up against the current price. A Narrative is simply you saying, “Here is how I think this business plays out” and linking that story directly to a forecast and a fair value, all in an easy tool on the Community page that millions of investors already use. Because Narratives live on the platform, they can refresh as new earnings, news or guidance arrive, so your view is not frozen. For Paycom specifically, one Narrative might look closer to a fair value of about US$260.61 with assumptions for higher growth and margins, while another might anchor nearer to around US$165.00 with more cautious revenue and P/E expectations, and seeing both side by side helps you decide whether the current price looks attractive, fully priced or expensive based on your own conviction rather than any single model.

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 1-Year Stock Price Chart

_ 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly._ Alternatively, email editorial-team@simplywallst.com_

Terms and Privacy Policy

Privacy Dashboard

More Info