Bull Of The Day: Paycom Software

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Paycom Software (PAYC - Free Report) is a $17 billion provider of integrated HR services for corporations. Shares surged above $500 last autumn after another stellar earnings report inspired analysts to raise estimates and targets.

A more uncertain outlook for the next two quarters saw shares get pulled down in the software/cloud bear market of the last six months.

But all that could be about to reverse as the company's Q1'22 beat-and-raise report has analysts once again raising estimates.

PAYC is projected to pull in topline revenues this year of $1.33 billion, representing 26.4% annual growth. And the consensus EPS forecast is $5.53, for a 23.4% advance.

Shark Tank's Barbara Corcoran Likes the App for That

Much like bigger peers Automatic Data Processing (ADP - Free Report) and Paychex (PAYX - Free Report), Paycom provides functionality and data analytics that businesses need to manage the complete employment life cycle from recruitment to retirement. Its HCM (human capital management) solution offers a suite of applications in the areas of talent acquisition, time and labor management, and payroll.

But where the David among Goliaths has innovated faster is with a smartphone app that allows employees to access and engage their data at will. You've likely seen the commercials where Shark Tank's Barbara Corcoran shows off the slick features of the on-the-go HR app.

Bringing HCM to the People

Here's how the Paycom website describes the challenges they solve...

Still clinging to multiple HR systems and outdated processes? Whether you’re using bad tech, too much tech or no tech at all, the results are the same: productivity suffers and frustrations climb.

With Paycom, employees can enter and manage their own HR data in a single, easy-to-use software. When they do, the weight of inefficient processes is finally lifted to transform your entire organization for the better.

Here are the benefits Paycom lists for companies who give their employees a self-service HR platform accessible on their smartphones...

  • HR is freed of this administrative burden
  • Efficiencies spread companywide
  • Employee engagement rises
  • Data accuracy increases
  • ROI is maximized

FinTech... from HR and Payroll?

Founded in 1998, Paycom company offers analytics that manages the complete employment life cycle from recruitment to retirement with cloud-based human capital management (HCM) SaaS solutions for employee records, payroll, and talent management processes.

Oklahoma City-based Paycom serves more than 23,500 clients in all 50 states or nearly 12,700 customers based on Parent Company Grouping. Its human resource services include retirement services administration, workers’ compensation administration, employee benefits solutions, professional employer organization, and other administrative services for businesses.

Paycom’s HCM solution offers a full suite of applications that generally falls within the following categories: talent acquisition, time and labor management, payroll, talent management, and HR management.

Its HCM software streamlines and automates many of the day-to-day record-keeping processes and provides a framework for HR staff to manage benefits administration and payroll, map out succession planning, and document such things as personnel actions and compliance with industry and/or government regulations.

Ideally, the cloud-based HCM reduces the administrative burden on employers and increases employee productivity and retention.

Instant Access = Increased Engagement

In the era of HCM, employers are looking for new ways to empower employees and encourage engagement. Since it's easy to forget about the total benefits one receives from a corporate job, the ability to instantly access key information and choices at the tap of a finger is a synergistic bonus for everyone.

That access can include tasks and elements like requesting time off, seeing compensation, expenses, documents, and even performance.

This may be one reason that Paycom has such a rich valuation as they help corporations merge into the FinTech universe that their employees-as-consumers are now accustomed to with apps and access at their fingertips.

It certainly makes sense since we can access everything else in our financial lives this way.

Bottom line: Buy PAYC while you still can near $300

Kevin Cook is a Senior Stock Strategist for Zacks Investment Research where he runs the TAZR Trader and more

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