PAYC growing fast

They have weathered the unexpected black swan event very well.
Paycom provides payroll and HR software in an integrated cloud package. And everyone loves the cloud these days.

“The company has consistently outperformed expectations, is expected to grow well over 40% in 2016, and is nicely profitable — a rare combination in the cloud software space,” Canaccord Genuity analyst David Hynes said in a recent note to clients. He rates Paycom stock as a buy with a price target of 55

Paycom focuses mostly on small and midsize companies with 50 to 2,000 workers for its software-as-a-service. That keeps it under the radar of larger firms such as payroll-processing leader ADP(ADP) and cloud-based human resources software provider Workday (WDAY).
Still, ADP is considered to be among its main rivals, along with Paychex (PAYX),Paylocity (PCTY) andUltimate Software (ULTI),

“We believe our success is due to the growing recognition of the benefits that can be gained from Paycom’s single database architecture,” Paycom Chief Executive Chad Richison said on a conference call with analysts on Aug. 2.

Its customer growth strategy is based on expanding its sales organization through new regional offices across the U.S. Paycom has 42 sales offices now with line of sight to about 124 possible offices, MacMillan said.
“We are still in the early stages of a multiyear mission to gain market share and grow into one of the largest providers of cloud-based payroll and human capital management software,” Richison said.

MacMillan believes Paycom can grow its sales by 25% or more for the next three years by adding new customers and increasing revenue per customer.
HR management today is all about regulatory compliance and benefits, so Paycom and the industry benefit when the government imposes new employee rules on companies.

You, know, the ACA “Obamacare” will keep them cranking. Also, the growing emphasis on diversity seems to be helping them out.

Paycom likely gets about half its new customers by winning business away from ADP and, to a lesser extent, Paychex, he said. The rest it pulls from small regional players running payroll-centric licensing software and from in-house and on-premises services like Microsoft (MSFT) Dynamics GP and Sage.
Paycom is scheduled to report third-quarter results after the market close on Nov. 1.

They are new and nimble and may be leapfrogging older companies. If you have some old in-house solution and you can jump straight to the cloud, that is very tempting.

Paycom is starting to face difficult comparisons to big year-ago quarters, so its growth rate is likely to decelerate, MacMillan said.
There’s a lot to like about Paycom, MacMillan said. He just thinks the stock is fairly valued at current levels.

Very strong growth ratings, which also means expectations are high
Checklist…Rating
Composite Rating 99 Pass
EPS Rating …99 Pass
RS Rating …90 Pass
Group RS Rating A+ Pass
SMR Rating …A Pass
Acc/Dis Rating B- Pass

Chartwise it is working on a flat base with a buy point of $53.03 I have been long but would add 20-30% if it broke out on strong volume.

Earnings: 11/1/16

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The tough comparables are important. The need of all employers to provide employees with statements showing health coverage status for each month gave a big lift to payroll companies. They all had a big boost to earning, and now that boost has taken place and they will return to baseline growth.

Dont get me wrong, I like PAYC, and own some. But that was an unusual event, and frankly i hope the government does not double the required forms again, as much as that would benefit the paroll companies.

Flygal

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But that was an unusual event, and frankly i hope the government does not double the required forms again, as much as that would benefit the payroll companies.

Whichever candidate wins, changes to ACA are a comin’