Paycom Jumps 26% in a Month: Is the Stock Still Worth Buying?

Barchart·05/19/2025 11:18:17

Paycom Software PAYC shares have jumped 26.3% over the past month, outperforming the broader Zacks Computer and Technology sector’s rally of 22.6% and the S&P 500 index’s rise of 15.3%.

Paycom’s recent rally stemmed from broader market optimism. Progress in the United States-China trade negotiations has been boosting market sentiment since late April. This has been compounded by better-than-expected first-quarter 2025 results. Apart from surpassing the Zacks Consensus Estimates, first-quarter revenues and non-GAAP EPS increased 6.1% and 8%, respectively.

PAYC’s strong first-quarter performance was mainly driven by its emphasis on automation, effective sales execution and operational efficiency. Its efforts to boost client ROI through automation have also contributed to wider margins and sustained growth. (Read more: Paycom Stock Gains as Q1 Earnings and Revenues Beat Estimates)

As a result of its momentum, PAYC has outperformed its key competitors, including Automatic Data Processing ADP, Paylocity Holding PCTY and Paychex PAYX. Shares of Automatic Data Processing, Paylocity Holding and Paychex have gained 12.1%, 12% and 11.1%, respectively.

Product Enhancements Drive Success for PAYC

Paycom’s Beti (Better Employee Transaction Interface) platform continues to deliver clear operational value, with reported reductions of 90% in payroll labor requirements and 85% in error correction time. These efficiencies have translated directly into improved client retention and satisfaction, reinforcing Paycom’s value proposition in the highly competitive HCM market.

The power of Beti and its ability to ensure accurate payrolls are also drawing former customers back. A 500-employee healthcare firm recently came back to Paycom after realizing the challenges of leaving behind its seamless payroll experience. Their return reflects Beti’s superior automation architecture and measurable ROI.

Paycom’s GONE (General Onboarding and Employee Navigation) automation solution is designed to eliminate inefficiencies in the onboarding process and enhance client productivity. GONE's scalable automation framework enables clients to achieve operational excellence, with studies showing up to 800% return on investment across deployments.

Client-Focused Initiatives Aid Paycom's Performance

The company has demonstrated a significant enhancement in customer satisfaction, as evidenced by a 16-point year-over-year increase in its Net Promoter Score in the first quarter of 2025. This improvement underscores the company's successful implementation of client-focused initiatives and technological innovations aimed at elevating the user experience.

With a focus on providing world-class service and delivering real financial returns for clients, Paycom continues to expand margins while accelerating growth across its operations.

PAYC’s 2025 Outlook Looks Promising

Paycom’s robust sales performance and improved operational efficiency have enabled the company to raise its 2025 outlook.

The company raised its 2025 revenue guidance to $2.023-$2.038 billion, suggesting 8% year-over-year growth at the mid-point. The Zacks Consensus Estimate for revenues is pegged at $2.03 billion, indicating 7.82% year-over-year growth.

The consensus mark for 2025 earnings is pinned at $8.91 per share, which has increased 2.2% over the past 30 days. The estimate indicates year-over-year growth of 8.53%.

Conclusion

Paycom’s accelerating growth, product innovation and expanding margins underscore its long-term potential. With strong client retention and ROI-driven adoption, PAYC is well-positioned for continued outperformance. Margin expansion and high ROI for clients suggest more runway ahead. Investors should take advantage of current levels and add the stock to their portfolios right now.

Paycom currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Paychex, Inc. (PAYX): Free Stock Analysis Report
 
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