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.

Economic Value Added (EVA)

Microsoft Excel

EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.


Economic Profit

Paycom Software Inc., economic profit calculation

US$ in thousands

Microsoft Excel
12 months ended: Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Net operating profit after taxes (NOPAT)1 297,371 244,272 176,158 214,806 172,096
Cost of capital2 17.01% 17.02% 17.03% 17.01% 16.97%
Invested capital3 1,478,485 1,189,369 860,024 724,133 522,609
 
Economic profit4 45,909 41,865 29,722 91,598 83,418

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2022 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 297,37117.01% × 1,478,485 = 45,909

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. Paycom Software Inc. economic profit increased from 2020 to 2021 and from 2021 to 2022.

Net Operating Profit after Taxes (NOPAT)

Paycom Software Inc., NOPAT calculation

US$ in thousands

Microsoft Excel
12 months ended: Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Net income 281,389 195,960 143,453 180,576 137,065
Deferred income tax expense (benefit)1 (3,210) 32,906 21,381 21,011 21,077
Increase (decrease) in deferred revenue2 15,990 14,600 10,582 11,593 13,027
Increase (decrease) in equity equivalents3 12,780 47,506 31,963 32,604 34,104
Interest expense 2,536 19 940 766
Interest expense, operating lease liability4 1,517 1,020 921 1,119 408
Adjusted interest expense 4,053 1,020 940 2,059 1,174
Tax benefit of interest expense5 (851) (214) (197) (432) (247)
Adjusted interest expense, after taxes6 3,202 806 742 1,626 927
Net operating profit after taxes (NOPAT) 297,371 244,272 176,158 214,806 172,096

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in deferred revenue.

3 Addition of increase (decrease) in equity equivalents to net income.

4 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 41,012 × 3.70% = 1,517

5 2022 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 4,053 × 21.00% = 851

6 Addition of after taxes interest expense to net income.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. Paycom Software Inc. NOPAT increased from 2020 to 2021 and from 2021 to 2022.

Cash Operating Taxes

Paycom Software Inc., cash operating taxes calculation

US$ in thousands

Microsoft Excel
12 months ended: Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Provision for income taxes 108,189 60,002 42,483 45,511 37,646
Less: Deferred income tax expense (benefit) (3,210) 32,906 21,381 21,011 21,077
Add: Tax savings from interest expense 851 214 197 432 247
Cash operating taxes 112,250 27,310 21,299 24,932 16,816

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. Paycom Software Inc. cash operating taxes increased from 2020 to 2021 and from 2021 to 2022.

Invested Capital

Paycom Software Inc., invested capital calculation (financing approach)

US$ in thousands

Microsoft Excel
Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Current portion of long-term debt 1,775 1,775 1,775 1,775
Net long-term debt, less current portion 29,000 27,380 29,119 30,858 32,614
Operating lease liability1 41,012 30,912 27,896 28,685 27,199
Total reported debt & leases 70,012 60,067 58,790 61,318 61,588
Stockholders’ equity 1,182,607 893,714 655,643 526,628 334,753
Net deferred tax (assets) liabilities2 141,033 145,504 112,598 91,217 70,206
Deferred revenue3 117,416 101,426 86,826 76,244 64,651
Equity equivalents4 258,449 246,930 199,424 167,461 134,857
Accumulated other comprehensive (income) loss, net of tax5 3,703
Adjusted stockholders’ equity 1,444,759 1,140,644 855,067 694,089 469,610
Construction in progress6 (36,286) (11,342) (53,833) (31,274) (8,589)
Invested capital 1,478,485 1,189,369 860,024 724,133 522,609

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of deferred revenue.

4 Addition of equity equivalents to stockholders’ equity.

5 Removal of accumulated other comprehensive income.

6 Subtraction of construction in progress.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Paycom Software Inc. invested capital increased from 2020 to 2021 and from 2021 to 2022.

Cost of Capital

Paycom Software Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 17,792,735 17,792,735 ÷ 17,862,747 = 1.00 1.00 × 17.06% = 17.00%
Long-term debt3 29,000 29,000 ÷ 17,862,747 = 0.00 0.00 × 3.70% × (1 – 21.00%) = 0.00%
Operating lease liability4 41,012 41,012 ÷ 17,862,747 = 0.00 0.00 × 3.70% × (1 – 21.00%) = 0.01%
Total: 17,862,747 1.00 17.01%

Based on: 10-K (reporting date: 2022-12-31).

1 US$ in thousands

2 Equity. See details »

3 Long-term debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 19,012,528 19,012,528 ÷ 19,072,595 = 1.00 1.00 × 17.06% = 17.01%
Long-term debt3 29,155 29,155 ÷ 19,072,595 = 0.00 0.00 × 3.30% × (1 – 21.00%) = 0.00%
Operating lease liability4 30,912 30,912 ÷ 19,072,595 = 0.00 0.00 × 3.30% × (1 – 21.00%) = 0.00%
Total: 19,072,595 1.00 17.02%

Based on: 10-K (reporting date: 2021-12-31).

1 US$ in thousands

2 Equity. See details »

3 Long-term debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 23,185,491 23,185,491 ÷ 23,244,281 = 1.00 1.00 × 17.06% = 17.02%
Long-term debt3 30,894 30,894 ÷ 23,244,281 = 0.00 0.00 × 3.30% × (1 – 21.00%) = 0.00%
Operating lease liability4 27,896 27,896 ÷ 23,244,281 = 0.00 0.00 × 3.30% × (1 – 21.00%) = 0.00%
Total: 23,244,281 1.00 17.03%

Based on: 10-K (reporting date: 2020-12-31).

1 US$ in thousands

2 Equity. See details »

3 Long-term debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 17,488,062 17,488,062 ÷ 17,549,380 = 1.00 1.00 × 17.06% = 17.00%
Long-term debt3 32,633 32,633 ÷ 17,549,380 = 0.00 0.00 × 3.90% × (1 – 21.00%) = 0.01%
Operating lease liability4 28,685 28,685 ÷ 17,549,380 = 0.00 0.00 × 3.90% × (1 – 21.00%) = 0.01%
Total: 17,549,380 1.00 17.01%

Based on: 10-K (reporting date: 2019-12-31).

1 US$ in thousands

2 Equity. See details »

3 Long-term debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 10,217,070 10,217,070 ÷ 10,278,658 = 0.99 0.99 × 17.06% = 16.96%
Long-term debt3 34,389 34,389 ÷ 10,278,658 = 0.00 0.00 × 1.50% × (1 – 21.00%) = 0.00%
Operating lease liability4 27,199 27,199 ÷ 10,278,658 = 0.00 0.00 × 1.50% × (1 – 21.00%) = 0.00%
Total: 10,278,658 1.00 16.97%

Based on: 10-K (reporting date: 2018-12-31).

1 US$ in thousands

2 Equity. See details »

3 Long-term debt. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Paycom Software Inc., economic spread ratio calculation

Microsoft Excel
Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Selected Financial Data (US$ in thousands)
Economic profit1 45,909 41,865 29,722 91,598 83,418
Invested capital2 1,478,485 1,189,369 860,024 724,133 522,609
Performance Ratio
Economic spread ratio3 3.11% 3.52% 3.46% 12.65% 15.96%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

1 Economic profit. See details »

2 Invested capital. See details »

3 2022 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 45,909 ÷ 1,478,485 = 3.11%

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. Paycom Software Inc. economic spread ratio improved from 2020 to 2021 but then deteriorated significantly from 2021 to 2022.

Economic Profit Margin

Paycom Software Inc., economic profit margin calculation

Microsoft Excel
Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Selected Financial Data (US$ in thousands)
Economic profit1 45,909 41,865 29,722 91,598 83,418
 
Revenues 1,375,218 1,055,524 841,434 737,671 566,336
Add: Increase (decrease) in deferred revenue 15,990 14,600 10,582 11,593 13,027
Adjusted revenues 1,391,208 1,070,124 852,016 749,264 579,363
Performance Ratio
Economic profit margin2 3.30% 3.91% 3.49% 12.23% 14.40%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

1 Economic profit. See details »

2 2022 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × 45,909 ÷ 1,391,208 = 3.30%

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. Paycom Software Inc. economic profit margin improved from 2020 to 2021 but then deteriorated significantly from 2021 to 2022.