Stock Analysis on Net

Paycom Software Inc. (NYSE:PAYC)

This company has been moved to the archive! The financial data has not been updated since November 2, 2023.

Capital Asset Pricing Model (CAPM)

Microsoft Excel

Capital asset pricing model (CAPM) indicates what should be the expected or required rate of return on risky assets like Paycom Software Inc. common stock.


Rates of Return

Paycom Software Inc., monthly rates of return

Microsoft Excel
Paycom Software Inc. (PAYC) Standard & Poor’s 500 (S&P 500)
t Date PricePAYC,t1 DividendPAYC,t1 RPAYC,t2 PriceS&P 500,t RS&P 500,t3
Jan 31, 2018 $91.64 2,823.81
1. Feb 28, 2018 $98.92 7.94% 2,713.83 -3.89%
2. Mar 31, 2018 $107.39 8.56% 2,640.87 -2.69%
3. Apr 30, 2018 $114.21 6.35% 2,648.05 0.27%
. . . . . . .
. . . . . . .
. . . . . . .
58. Nov 30, 2022 $339.10 -1.99% 4,080.11 5.38%
59. Dec 31, 2022 $310.31 -8.49% 3,839.50 -5.90%
Average (R): 2.98% 0.67%
Standard deviation: 13.66% 5.40%
Paycom Software Inc. (PAYC) Standard & Poor’s 500 (S&P 500)
t Date PricePAYC,t1 DividendPAYC,t1 RPAYC,t2 PriceS&P 500,t RS&P 500,t3
Jan 31, 2018 $91.64 2,823.81
1. Feb 28, 2018 $98.92 7.94% 2,713.83 -3.89%
2. Mar 31, 2018 $107.39 8.56% 2,640.87 -2.69%
3. Apr 30, 2018 $114.21 6.35% 2,648.05 0.27%
4. May 31, 2018 $105.47 -7.65% 2,705.27 2.16%
5. Jun 30, 2018 $98.83 -6.30% 2,718.37 0.48%
6. Jul 31, 2018 $106.25 7.51% 2,816.29 3.60%
7. Aug 31, 2018 $155.12 46.00% 2,901.52 3.03%
8. Sep 30, 2018 $155.41 0.19% 2,913.98 0.43%
9. Oct 31, 2018 $125.20 -19.44% 2,711.74 -6.94%
10. Nov 30, 2018 $132.77 6.05% 2,760.17 1.79%
11. Dec 31, 2018 $122.45 -7.77% 2,506.85 -9.18%
12. Jan 31, 2019 $148.24 21.06% 2,704.10 7.87%
13. Feb 28, 2019 $181.73 22.59% 2,784.49 2.97%
14. Mar 31, 2019 $189.13 4.07% 2,834.40 1.79%
15. Apr 30, 2019 $202.53 7.09% 2,945.83 3.93%
16. May 31, 2019 $212.10 4.73% 2,752.06 -6.58%
17. Jun 30, 2019 $226.72 6.89% 2,941.76 6.89%
18. Jul 31, 2019 $240.75 6.19% 2,980.38 1.31%
19. Aug 31, 2019 $250.12 3.89% 2,926.46 -1.81%
20. Sep 30, 2019 $209.49 -16.24% 2,976.74 1.72%
21. Oct 31, 2019 $211.53 0.97% 3,037.56 2.04%
22. Nov 30, 2019 $276.81 30.86% 3,140.98 3.40%
23. Dec 31, 2019 $264.76 -4.35% 3,230.78 2.86%
24. Jan 31, 2020 $318.16 20.17% 3,225.52 -0.16%
25. Feb 29, 2020 $282.65 -11.16% 2,954.22 -8.41%
26. Mar 31, 2020 $202.01 -28.53% 2,584.59 -12.51%
27. Apr 30, 2020 $261.02 29.21% 2,912.43 12.68%
28. May 31, 2020 $297.23 13.87% 3,044.31 4.53%
29. Jun 30, 2020 $309.73 4.21% 3,100.29 1.84%
30. Jul 31, 2020 $284.37 -8.19% 3,271.12 5.51%
31. Aug 31, 2020 $299.46 5.31% 3,500.31 7.01%
32. Sep 30, 2020 $311.30 3.95% 3,363.00 -3.92%
33. Oct 31, 2020 $364.09 16.96% 3,269.96 -2.77%
34. Nov 30, 2020 $417.08 14.55% 3,621.63 10.75%
35. Dec 31, 2020 $452.25 8.43% 3,756.07 3.71%
36. Jan 31, 2021 $379.74 -16.03% 3,714.24 -1.11%
37. Feb 28, 2021 $374.24 -1.45% 3,811.15 2.61%
38. Mar 31, 2021 $370.06 -1.12% 3,972.89 4.24%
39. Apr 30, 2021 $384.41 3.88% 4,181.17 5.24%
40. May 31, 2021 $329.60 -14.26% 4,204.11 0.55%
41. Jun 30, 2021 $363.47 10.28% 4,297.50 2.22%
42. Jul 31, 2021 $400.00 10.05% 4,395.26 2.27%
43. Aug 31, 2021 $488.90 22.23% 4,522.68 2.90%
44. Sep 30, 2021 $495.75 1.40% 4,307.54 -4.76%
45. Oct 31, 2021 $547.85 10.51% 4,605.38 6.91%
46. Nov 30, 2021 $437.48 -20.15% 4,567.00 -0.83%
47. Dec 31, 2021 $415.19 -5.10% 4,766.18 4.36%
48. Jan 31, 2022 $335.30 -19.24% 4,515.55 -5.26%
49. Feb 28, 2022 $339.21 1.17% 4,373.94 -3.14%
50. Mar 31, 2022 $346.38 2.11% 4,530.41 3.58%
51. Apr 30, 2022 $281.47 -18.74% 4,131.93 -8.80%
52. May 31, 2022 $284.34 1.02% 4,132.15 0.01%
53. Jun 30, 2022 $280.12 -1.48% 3,785.38 -8.39%
54. Jul 31, 2022 $330.49 17.98% 4,130.29 9.11%
55. Aug 31, 2022 $351.20 6.27% 3,955.00 -4.24%
56. Sep 30, 2022 $329.99 -6.04% 3,585.62 -9.34%
57. Oct 31, 2022 $346.00 4.85% 3,871.98 7.99%
58. Nov 30, 2022 $339.10 -1.99% 4,080.11 5.38%
59. Dec 31, 2022 $310.31 -8.49% 3,839.50 -5.90%
Average (R): 2.98% 0.67%
Standard deviation: 13.66% 5.40%

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1 Data in US$ per share of common stock, adjusted for splits and stock dividends.

2 Rate of return on common stock of PAYC during period t

3 Rate of return on S&P 500 (the market portfolio proxy) during period t


Variance and Covariance

Paycom Software Inc., calculation of variance and covariance of returns

Microsoft Excel
t Date RPAYC,t RS&P 500,t (RPAYC,tRPAYC)2 (RS&P 500,tRS&P 500)2 (RPAYC,tRPAYC)×(RS&P 500,tRS&P 500)
1. Feb 28, 2018 7.94% -3.89% 24.68 20.81 -22.66
2. Mar 31, 2018 8.56% -2.69% 31.20 11.26 -18.74
3. Apr 30, 2018 6.35% 0.27% 11.38 0.16 -1.33
. . . . . . .
. . . . . . .
. . . . . . .
58. Nov 30, 2022 -1.99% 5.38% 24.71 22.17 -23.41
59. Dec 31, 2022 -8.49% -5.90% 131.48 43.08 75.26
Total (Σ): 10,822.04 1,691.48 2,299.49
t Date RPAYC,t RS&P 500,t (RPAYC,tRPAYC)2 (RS&P 500,tRS&P 500)2 (RPAYC,tRPAYC)×(RS&P 500,tRS&P 500)
1. Feb 28, 2018 7.94% -3.89% 24.68 20.81 -22.66
2. Mar 31, 2018 8.56% -2.69% 31.20 11.26 -18.74
3. Apr 30, 2018 6.35% 0.27% 11.38 0.16 -1.33
4. May 31, 2018 -7.65% 2.16% 112.98 2.23 -15.88
5. Jun 30, 2018 -6.30% 0.48% 85.97 0.03 1.69
6. Jul 31, 2018 7.51% 3.60% 20.53 8.62 13.30
7. Aug 31, 2018 46.00% 3.03% 1,850.61 5.57 101.51
8. Sep 30, 2018 0.19% 0.43% 7.78 0.06 0.66
9. Oct 31, 2018 -19.44% -6.94% 502.45 57.87 170.51
10. Nov 30, 2018 6.05% 1.79% 9.42 1.25 3.44
11. Dec 31, 2018 -7.77% -9.18% 115.55 96.91 105.82
12. Jan 31, 2019 21.06% 7.87% 327.07 51.87 130.25
13. Feb 28, 2019 22.59% 2.97% 384.76 5.32 45.24
14. Mar 31, 2019 4.07% 1.79% 1.20 1.27 1.23
15. Apr 30, 2019 7.09% 3.93% 16.88 10.66 13.41
16. May 31, 2019 4.73% -6.58% 3.06 52.48 -12.67
17. Jun 30, 2019 6.89% 6.89% 15.34 38.77 24.39
18. Jul 31, 2019 6.19% 1.31% 10.32 0.42 2.08
19. Aug 31, 2019 3.89% -1.81% 0.84 6.13 -2.27
20. Sep 30, 2019 -16.24% 1.72% 369.44 1.11 -20.21
21. Oct 31, 2019 0.97% 2.04% 4.01 1.89 -2.76
22. Nov 30, 2019 30.86% 3.40% 777.54 7.50 76.35
23. Dec 31, 2019 -4.35% 2.86% 53.72 4.81 -16.07
24. Jan 31, 2020 20.17% -0.16% 295.59 0.69 -14.26
25. Feb 29, 2020 -11.16% -8.41% 199.87 82.40 128.34
26. Mar 31, 2020 -28.53% -12.51% 992.66 173.67 415.21
27. Apr 30, 2020 29.21% 12.68% 688.27 144.43 315.28
28. May 31, 2020 13.87% 4.53% 118.72 14.91 42.08
29. Jun 30, 2020 4.21% 1.84% 1.51 1.37 1.44
30. Jul 31, 2020 -8.19% 5.51% 124.64 23.46 -54.07
31. Aug 31, 2020 5.31% 7.01% 5.43 40.19 14.77
32. Sep 30, 2020 3.95% -3.92% 0.95 21.06 -4.48
33. Oct 31, 2020 16.96% -2.77% 195.48 11.79 -48.00
34. Nov 30, 2020 14.55% 10.75% 134.04 101.77 116.79
35. Dec 31, 2020 8.43% 3.71% 29.77 9.28 16.62
36. Jan 31, 2021 -16.03% -1.11% 361.37 3.17 33.84
37. Feb 28, 2021 -1.45% 2.61% 19.58 3.77 -8.60
38. Mar 31, 2021 -1.12% 4.24% 16.76 12.80 -14.64
39. Apr 30, 2021 3.88% 5.24% 0.81 20.94 4.12
40. May 31, 2021 -14.26% 0.55% 297.04 0.01 2.03
41. Jun 30, 2021 10.28% 2.22% 53.28 2.42 11.35
42. Jul 31, 2021 10.05% 2.27% 50.04 2.59 11.38
43. Aug 31, 2021 22.23% 2.90% 370.50 4.98 42.97
44. Sep 30, 2021 1.40% -4.76% 2.48 29.42 8.54
45. Oct 31, 2021 10.51% 6.91% 56.74 39.03 47.06
46. Nov 30, 2021 -20.15% -0.83% 534.65 2.25 34.68
47. Dec 31, 2021 -5.10% 4.36% 65.15 13.65 -29.82
48. Jan 31, 2022 -19.24% -5.26% 493.65 35.11 131.65
49. Feb 28, 2022 1.17% -3.14% 3.28 14.46 6.88
50. Mar 31, 2022 2.11% 3.58% 0.74 8.47 -2.51
51. Apr 30, 2022 -18.74% -8.80% 471.59 89.54 205.48
52. May 31, 2022 1.02% 0.01% 3.83 0.44 1.29
53. Jun 30, 2022 -1.48% -8.39% 19.90 82.06 40.41
54. Jul 31, 2022 17.98% 9.11% 225.15 71.32 126.72
55. Aug 31, 2022 6.27% -4.24% 10.82 24.11 -16.16
56. Sep 30, 2022 -6.04% -9.34% 81.29 100.12 90.21
57. Oct 31, 2022 4.85% 7.99% 3.52 53.58 13.73
58. Nov 30, 2022 -1.99% 5.38% 24.71 22.17 -23.41
59. Dec 31, 2022 -8.49% -5.90% 131.48 43.08 75.26
Total (Σ): 10,822.04 1,691.48 2,299.49

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VariancePAYC = Σ(RPAYC,tRPAYC)2 ÷ (59 – 1)
= 10,822.04 ÷ (59 – 1)
= 186.59

VarianceS&P 500 = Σ(RS&P 500,tRS&P 500)2 ÷ (59 – 1)
= 1,691.48 ÷ (59 – 1)
= 29.16

CovariancePAYC, S&P 500 = Σ(RPAYC,tRPAYC)×(RS&P 500,tRS&P 500) ÷ (59 – 1)
= 2,299.49 ÷ (59 – 1)
= 39.65


Systematic Risk (β) Estimation

Microsoft Excel
VariancePAYC 186.59
VarianceS&P 500 29.16
CovariancePAYC, S&P 500 39.65
Correlation coefficientPAYC, S&P 5001 0.54
βPAYC2 1.36
αPAYC3 2.07%

Calculations

1 Correlation coefficientPAYC, S&P 500
= CovariancePAYC, S&P 500 ÷ (Standard deviationPAYC × Standard deviationS&P 500)
= 39.65 ÷ (13.66% × 5.40%)
= 0.54

2 βPAYC
= CovariancePAYC, S&P 500 ÷ VarianceS&P 500
= 39.65 ÷ 29.16
= 1.36

3 αPAYC
= AveragePAYC – βPAYC × AverageS&P 500
= 2.98%1.36 × 0.67%
= 2.07%


Expected Rate of Return

Microsoft Excel
Assumptions
Rate of return on LT Treasury Composite1 RF 4.67%
Expected rate of return on market portfolio2 E(RM) 13.79%
Systematic risk (β) of Paycom Software Inc. common stock βPAYC 1.36
 
Expected rate of return on Paycom Software Inc. common stock3 E(RPAYC) 17.06%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 E(RPAYC) = RF + βPAYC [E(RM) – RF]
= 4.67% + 1.36 [13.79%4.67%]
= 17.06%