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It's been a good week for Paycom Software, Inc. (NYSE:PAYC) shareholders, because the company has just released its latest yearly results, and the shares gained 3.4% to US$212. Paycom Software reported US$1.9b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$8.92 beat expectations, being 4.8% higher than what the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Paycom Software after the latest results.
Check out our latest analysis for Paycom Software
Following the latest results, Paycom Software's 17 analysts are now forecasting revenues of US$2.03b in 2025. This would be a satisfactory 7.6% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to dive 28% to US$6.70 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.05b and earnings per share (EPS) of US$7.07 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$221, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Paycom Software, with the most bullish analyst valuing it at US$278 and the most bearish at US$187 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Paycom Software's revenue growth is expected to slow, with the forecast 7.6% annualised growth rate until the end of 2025 being well below the historical 20% p.a. growth over the last five years. Compare this to the 139 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 6.6% per year. Factoring in the forecast slowdown in growth, it looks like Paycom Software is forecast to grow at about the same rate as the wider industry.