PAYC
Paycom Software, Inc.
$139.08
Platform & Compounding FCF
85%
Two-stage FCF DCF
Moderate
·
Conviction
Fair Value
Trading 18.5% below fair value
You pay
$139.08
Bear
$112.30
Fair
$170.56
Bull
$234.42
Bear
$112.30
-19.3%
9% stage 1 growth, 11% discount
Fair
$170.56
+22.6%
14% stage 1 growth, 11% discount
Bull
$234.42
+68.6%
19% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (14% base case)
Terminal Value % of EV
42%
Implied Market Multiple
23.1x
Market is pricing in (growth)
10.9%
vs 14.3% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $151.75 from 36 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $170.56 per share.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions