Paycom Software Inc. (PAYC): analysis and signal as of September 3, 2026
In short
The signal on Paycom Software (PAYC) comes out weak and the score stands at -2.0. This note reflects the gap between a profitable operating model and a price far from the median consensus target.
- Current signal
- weak (vote 3/3)
- Deterministic score
- -2.0 → signal expected by the scale : no signal (September 10, 2026)
- Layers
- fundamentals : positive, price : neutral, risks : neutral
Triggered rules
| Rule | Weight |
|---|---|
| penalizes a probable accounting manipulation profile (Beneish M-Score above the -1,78 threshold) | -3.0 |
| favors a high and durable return on invested capital (ROIC), a marker of a lasting moat | +2.0 |
| penalizes direct holding of US securities in a CTO (US estate tax at death), favors a UCITS ETF domiciled in IE | -1.0 |
| moderately favors an asset with robust operating profitability (RMW factor), cross-check with accounting quality (possible manipulation) | +0.5 |
| moderately penalizes an asset with very aggressive asset growth / investment (CMA factor favors conservatism), context-dependent | -0.5 |
Thesis
The thesis combines high profitability with a growth slowdown and a price extension above technical references. The adjusted EBITDA margin of 44 % in the second quarter of 2026 and a GAAP net result at 20 % of revenues confirm the quality of the model. At the same time, growth is guided between 6 and 9 % depending on indications and the price of 236 USD exceeds the median consensus target of 207 USD. The extension of nearly 60 % above the 200-day moving average reduces the available margin of safety.
Bull case
The bullish argument rests on operational quality and capital generation. The adjusted EBITDA margin reaches 44 % in Q2 2026, the GAAP net result represents 20 % of revenues and cumulative buybacks reach approximately 1.45 Bn USD with 200 M USD of additional authorization added. Recurring revenues are guided at +8 or 9 % and the ROIC stands at +2.0, a sign of a defensible position against ADP, Paylocity and Workday.
Bear case
The bearish argument focuses on price and regularity of information. The stock trades about 14 % above the median target of 207 USD for single-digit growth, with a PER of 25.4 and an EV/EBITDA of 14.2 above its twelve-month average. The Beneish M-Score penalty (-3.0) has not been refuted by a specific figure. Founder sales (about 16 M USD), the unknown status of the Beti litigation and the guidance divergence between 6-7 % and 7-8 % maintain uncertainty.
Scenarios
Bullish scenario at 25 % with a target between 264 and 280 USD after a Q3 guidance upgrade. Central scenario at 50 % with a consolidation between 200 and 240 USD until the Q3 publication. Bearish scenario at 25 % with a return toward 177 USD then 160 USD, representing a maximum loss of about 32 % from 236 USD.
Risks
The main risk concerns the valuation extension and historical volatility of plus 3.6 %. The unresolved divergence between the M-Score penalty and the absence of quantified refutation degrades confidence. The qualitative invalidation is defined by a weekly close below the 200-day moving average, while a return toward 160 USD from 236 USD would represent a decline of about 32 %. Added to this are founder insider sales and the Beti litigation whose outcome remains unknown.
Market positioning (short sellers)
- Short interest / shares outstanding
- 7.04 %
- Days to cover
- 2.14
- Settlement date
- 2026-08-14
- Source
- FINRA (disseminated on 2026-08-26)
Upcoming catalysts
| Date | Description |
|---|---|
| Journée investisseurs PAYC, adoption de Beti AI et pouvoir de fixation des prix | |
| Résultats du T3 2026, ARR et marges | |
| Conférence utilisateur Betisoft, feuille de route produit 2027 |
Signal history (last 12 months)
| Date | Signal | New fact |
|---|---|---|
| weak (3/3) | No modification. No new fact dated after the verdict of 01/09/2026 has been provided. The elements of 02/09 repeat existing layers, several of which are marked as possibly outdated, which excludes their consideration as a new fact. The macro layer does not directly contradict the case, which excludes any further downgrade, but also does not provide any tailwind. | |
| weak (single draw, outside the three-draw protocol) | unchanged |
Frequently asked questions
What technical signal emerges from the current price?
The stock stands at 236 USD, nearly 60 % above the 200-day moving average. The extension above this technical reference reduces the margin of safety and constitutes a central element of the assigned -2.0 score. A weekly close below this average would invalidate the current reading.
How should the growth guidance divergence be interpreted?
The analysis layers show distinct growth ranges, between 6-7 % and 7-8 %, with a recurring revenue guidance at +8 or 9 %. The absence of convergence between these indications maintains uncertainty and weighs on the overall score in the current state of available information.
What should be taken from the Beneish M-Score penalty?
The M-Score stands at -3.0, which triggers a deterministic penalty. No quantitative data provided in the fundamental layers has allowed this signal to be refuted. This unresolved divergence degrades overall confidence and weighs on the final -2.0 score.
What does the share buyback program contribute to the thesis?
Cumulative buybacks reach approximately 1.45 Bn USD and an additional authorization of 200 M USD has been added. These buybacks support earnings per share and illustrate the company's capital generation capacity, without however changing the current valuation level.
What short-term catalysts should be monitored?
The third quarter publication and a possible pullback toward the 200 to 220 USD zone constitute the two identified catalysts. A Q3 guidance upgrade would orient toward the bullish scenario, while the absence of a catalyst would maintain the current sideways consolidation.
Sources
The official filings below are the issuer's own, matched to this stock by its identifier (LEI, CIK or ISIN). The figures quoted above come from an automated arbitration: they have not been re-checked one by one.
- — 10-Q (SEC · 10-Q)
- — 2.02 Results of Operations and Financial Condition; 9.01 Financial Statements and Exhibits (SEC · 8-K)
- — 8.01 Other Events; 9.01 Financial Statements and Exhibits (SEC · 8-K)
- — 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers; 7.01 Reg… (SEC · 8-K)
- — 5.07 Submission of Matters to a Vote of Security Holders (SEC · 8-K)
Automated AI analysis: limitations and transparency
- This content is an automated analysis produced using artificial intelligence. Personal analysis for information purposes — no personalised investment advice. MMR content consists of general research. It does not take account of your financial circumstances, objectives or risk tolerance. Data, analyses and results, including those produced using artificial intelligence, may contain errors, be incomplete or become outdated. No return or outcome is guaranteed. All investments carry a risk of partial or total loss of capital. Past performance and simulations do not predict future results. Before making any decision, check information against original sources and, where necessary, consult an authorised professional. You remain responsible for your investment decisions. This notice does not exclude or limit any liability that cannot legally be excluded or limited.
- Tool and analysis: QDNA, Aurélien Ambert.
- Analysis (arbitration) completed on September 3, 2026; this page was completed on September 4, 2026 at 03:02 (UTC).
- Interests: no position in the stock analysed (PAYC) is recorded in the data consulted on (UTC). This does not confirm the absence of holdings or other interests. The situation at the analysis publication date has not been reconstructed.
- This declaration covers only recorded positions in this stock; it is not an exhaustive verification of other interests or remuneration.
- Methodology: analysis chain, score formula and scale described on the public methodology page.
- Analysis horizon: 2035.
See also
- Neighbouring stock in the same sector: Apple Inc. (AAPL)
- All analysed stocks
- Public methodology