PAYC
Paycom Software, Inc.
$137.69
Platform & Compounding FCF
85%
Two-stage FCF DCF
Moderate
·
Conviction
Undervalued
Trading 32.7% below fair value
You pay
$137.69
Bear
$134.42
Fair
$204.68
Bull
$281.69
Bear
$134.42
-2.4%
9% stage 1 growth, 11% discount
Fair
$204.68
+48.7%
14% stage 1 growth, 11% discount
Bull
$281.69
+104.6%
19% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (14% base case)
Terminal Value % of EV
42%
Implied Market Multiple
17.9x
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 $204.68 per share.
Warnings
Wall Street's average price target is $151.75 (from 36 analysts). Our estimate is 50% above the consensus -- consider that gap carefully.
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