MeritValue

Paycom Software, Inc.

PAYCdata completeness 88%14 fiscal years on file
The thesis, from the filings

Paycom Software, Inc. earns about 35% on invested capital, far above its ~9% cost of capital, and has bought back 4% of its shares over 5 years — the marks of a durable business run for its owners. The estimate methods put fair value between $62.93 and $361.86 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$1.06B1$1.38B2$1.69B3$1.88B3$2.05B3
Net income$196M4$281.4M5$340.8M6$502M6$453.4M6
Operating cash flow$319.4M7$365.1M8$485M9$533.9M9$678.9M9
Capital expenditure$120.7M10$132.7M11$192.6M12$192.9M12$270.9M12
Free cash flow (derived)$198.7M7$232.4M8$292.4M9$341M9$408M9
Total debt$58.3M13$58M14———
Cash & equivalents$278M15$400.7M16$294M17$402M17$370M17
Diluted shares58.2M58.2M58.0M56.3M56.1M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$308.56
your share of equity
Profit it earned you last year
$80.8
Free cash flow it threw off
$72.71
Debt you’d be carrying
—

10 shares is a claim on $308.56 of net worth that earned you $80.8 and generated $72.71 of cash last year.

iii. Is this a good business?
Moat signal · return on invested capital
35% avg · 5y
FY21 29%FY22 34%FY23 34%FY24 43%FY25 33%

It earned about 35% on invested capital, year after year, against a ~9% cost of capital — the footprint of real pricing power. Competition usually drags returns like this back down; here it hasn't.

seeing a moat in the numbers →
Management signal · capital allocation
−4% shares · 5y

Share count is down 4% over 5 years — management has been buying back stock, quietly handing owners a bigger slice. Total debt has held roughly steady.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0

The 3 estimate methods that apply put fair value between $62.93 and $361.86 a share. They rest on different assumptions, so where they diverge is the story; the Graham Number is a stricter floor, not a target.

DCF · Growth Exit 10Y
$361.86
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears10
  • fcfGrowth19.7%
  • fcfBase$341M
DCF · Growth Exit 5Y
$202.67
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears5
  • fcfGrowth19.7%
  • fcfBase$341M
Earnings Power Value
$62.93
assumptions (8)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • normalizedEarnings$340.8M
  • growthAssumed0.0%
Graham Number
$74.9
assumptions (1)
  • grahamMultiplier2250.0%

Different models answer different questions — which to trust when →

v. The price question — last, on purpose
Is today’s price fair?
See live price ↗
Type a price. The ledger answers.
Or set your own belief
FCF growth, next 5 years19.7%
Discount rate (WACC)8.93%
Terminal growth2.5%
At your growth, a share is worth $202.67
The three cases
Bear0.0%$93.42
Base19.7%$202.67
Bull20.0%$204.72

Bear/base/bull growth = 0% / filed history / history + 5pp. Type a price to see the return each case implies.

Default growth 19.7%= this company’s own filed history (median-to-median FCF CAGR, clamped 0–20%). Your adjustments are recorded anonymously. They become the “what do owners actually believe” dataset.

Sources — the receipts
  1. 10-K · period ending 2021-12-31 · accession 0000950170-24-015863 (RevenueFromContractWithCustomerExcludingAssessedTax)
  2. 10-K · period ending 2022-12-31 · accession 0000950170-25-024136 (RevenueFromContractWithCustomerExcludingAssessedTax)
  3. 10-K · period ending 2023-12-31 · accession 0001193125-26-059372 (RevenueFromContractWithCustomerExcludingAssessedTax)
  4. 10-K · period ending 2021-12-31 · accession 0000950170-24-015863 (NetIncomeLoss)
  5. 10-K · period ending 2022-12-31 · accession 0000950170-25-024136 (NetIncomeLoss)
  6. 10-K · period ending 2023-12-31 · accession 0001193125-26-059372 (NetIncomeLoss)
  7. 10-K · period ending 2021-12-31 · accession 0000950170-24-015863 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2022-12-31 · accession 0000950170-25-024136 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2023-12-31 · accession 0001193125-26-059372 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2021-12-31 · accession 0000950170-24-015863 (PaymentsToAcquirePropertyPlantAndEquipment)
  11. 10-K · period ending 2022-12-31 · accession 0000950170-25-024136 (PaymentsToAcquirePropertyPlantAndEquipment)
  12. 10-K · period ending 2023-12-31 · accession 0001193125-26-059372 (PaymentsToAcquirePropertyPlantAndEquipment)
  13. 10-K · period ending 2021-12-31 · accession 0000950170-23-003049 (LongTermDebtNoncurrent)
  14. 10-K · period ending 2022-12-31 · accession 0000950170-24-015863 (LongTermDebtNoncurrent)
  15. 10-K · period ending 2021-12-31 · accession 0000950170-24-015863 (CashAndCashEquivalentsAtCarryingValue)
  16. 10-K · period ending 2022-12-31 · accession 0000950170-25-024136 (CashAndCashEquivalentsAtCarryingValue)
  17. 10-K · period ending 2023-12-31 · accession 0001193125-26-059372 (CashAndCashEquivalentsAtCarryingValue)