Long Trade Idea
Enter your long position between $122.62 (the upper band of its horizontal support zone) and $127.00 (Friday’s intra-day high).
Market Index Analysis
- Paycom Software (PAYC) is a member of the S&P 500 Index.
- This index trades inside a bearish chart pattern with rising bearish trading volumes.
- The Bull Bear Power Indicator for the S&P 500 Index is bearish with a descending trendline.
Market Sentiment Analysis
Equity futures are pointing to a lower opening as broader economic concerns and AI’s impact on everything from software to financial services, and from real estate to transportation, weigh on markets. Friday’s PCE and consumer confidence data will provide crucial economic data. Fed minutes from the latest meeting are scheduled for release on Wednesday, and questions about nominated Fed Chief Warsh and his loyalty pledge are raising concerns about Fed independence. This week will feature earnings from Walmart, DoorDash, Molson Coors, Constellation Energy, Energy Transfer, and Southern Company.
Paycom Software Fundamental Analysis
Paycom Software is an online payroll and human resources software company. It caters to customers in 190 countries in 15 dialects. Its core software products include Beti, Global HCM, GONE, and IWant. The latest addition is a command-driven AI engine for employee data searches, but it is more hype than a breakthrough in HR management.
So, why am I bullish on PAYC despite its muted 2026 guidance?
Paycom’s latest earnings release met expectations, but its 2026 revenue guidance was soft. Still, I turned bullish on PAYC amid its improved client retention rate of 91%, excellent margin guidance of 44%, indicating operational efficiency, and its free cash flow yield of nearly 10%. Short-term volatility may increase, but the company’s attractive valuations and 5-year PEG ratio confirm it is undervalued.
Metric | Value | Verdict |
P/E Ratio | 15.51 | Bullish |
P/B Ratio | 3.97 | Bearish |
PEG Ratio | 0.66 | Bullish |
Current Ratio | 1.09 | Bearish |
ROIC-WACC Ratio | Positive | Bullish |
The price-to-earnings (P/E) ratio of 15.51 makes PAYC an inexpensive stock. By comparison, the P/E ratio for the S&P 500 is 29.36.
The average analyst price target for PAYC is $151.18. This suggests good upside potential with reasonable downside risks.
Paycom Software Technical Analysis
Today’s PAYC Signal
- The PAYC D1 chart shows price action breaking out above its horizontal support zone.
- It also shows price action between its descending 0.0% and 38.2% Fibonacci Retracement Fan levels.
- The Bull Bear Power Indicator is bearish with a positive divergence.
- The average bullish trading volumes are higher than the average bearish trading volumes.
- PAYC corrected more than the S&P 500 Index, a bearish confirmation, but bullish factors are rising.
My PAYC Long Stock Trade
- PAYC Entry Level: Between $122.62 and $127.00
- PAYC Take Profit: Between $165.58 and $170.22
- PAYC Stop Loss: Between $101.75 and $104.90
- Risk/Reward Ratio: 2.06
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