Paycom Q2 Thoughts
Aug 4, 2024
Paycom delivered 9% revenue growth in Q2, with a solid 21.7% free cash margin. This is a pretty reliable company going through a bit of a revenue lull as its efficient BETI platform saves its customers money, but costs Paycom error correction revenue. That's ok with me - doing right by your customers at the cost of short-term sales is good business. The company also doubled its buyback authorization, a good move with the stock trading 40% under our fair value. Paycom is also back to a single founder-CEO arrangement after co-CEO Chris Thomas abruptly left in May. I'm ok with that - founder Chad Richison knows what he's doing - but it does raise a bit of concern about eventual succession. I'm raising the fair value by a few bucks to $286.
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vs. Fair Value Estimates