PAYC

Stoffel is one of my favorite Fool authors and did not disappoint here:

https://www.fool.com/investing/2017/02/05/heres-my-top-stock…

Once businesses sign on with Paycom, their HR departments become heavily reliant upon it to complete critical tasks, including processing paychecks, scheduling time off, tracking potential hires, and regulatory compliance. It would create huge headaches to switch – evidenced by the company’s 91% retention rate.

The company’s mission is to further the “ongoing development of a single application to lower labor costs, drive employee engagement, and reduce exposure.” Most people under-appreciate the “ongoing development” part, which means that further functionality will be added to Paycom’s cloud for customers. That’s why R&D spending quadrupled between 2013 and 2015, and has essentially doubled over the first three quarters of 2016 alone.

He discusses their risks getting new customers but also highlights the growing client count and their tendency to exceed expectations. Good stuff.

Bear

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The price recently dropped 16% in a matter of six trading days on virtually no news.

What?

It went down in sympathy with ADP which reported negative booking growth last quarter as they said that the ACA tailwind (combined with election paralysis - the company said they benefit from changes in regulations, not contemplation of changes) had turned. PAYX mentioned something similar. PAYC is a lot smaller and maybe feels no effects but that’s why it went down.

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the company said they benefit from changes in regulations, not contemplation of changes

good point. And thanks for the explanation of the PAYC drop.

Actual changes to Obamacare are coming for sure. But when? My guess not until next year, but it is nice to know about factors positively affecting a company in advance. More changes are coming and I guess from PAYC standpoint any change is a good change.

by the way, I should have written: 'I THINK it went down for this reason"

fwiw, ACA was a HUGE tailwind for these guys (again, PAYC might be small enough where it doesn’t matter; we will know soon enough)…from the ADP call:

So, I think what we’ve had is, we had – and I think been – every quarter, I think, very, very clear. We haven’t been pretending that it was either sustainable or that we had done something magical to all of a sudden create such a huge increase in productivity in our sales. I wish we had. Clearly, we got help from, and lift from ACA sales. We had two years of 13% and 12% new business bookings growth, fiscal years. I don’t know the last time that we had ever done that. Clearly, maybe we didn’t emphasize enough how much help we were getting and certainly now it’s difficult to go back to the sales force and remind them that we had help and now the help isn’t there any more. We’ve got to now focus on fundamentals. We’ve got to go back to selling new clients and the old-fashioned approach of ADP of having a reasonable mix of headcount growth and productivity growth and I think when I look through the numbers and try to normalize for ACA, we feel pretty good about where we are in terms of headcount and also sales force productivity.

adp is a big Bubba company too - 12 to 13% was stunning…