PAYC – Market expectations are for Uniform ROA to rebound, but management may be concerned about growth, innovation, and demand for their offerings

• Paycom Software, Inc. (PAYC:USA) currently trades well above corporate averages relative to UAFRS-based (Uniform) earnings, with a 63.3x Uniform P/E. At these levels, the market is pricing in bullish expectations for the firm, but management may be concerned about revenue growth, the value of their new innovations, and the demand for their employee self-service offering
• Specifically, management may lack confidence in their ability to sustain revenue growth, maintain adjusted EBITDA growth, and accelerate lead growth through their marketing strategies. In addition, they may be exaggerating the value-add of their new DDX and Manager-on-the-Go innovations and the time they save clients on manual tasks. Furthermore, management may lack confidence in their ability to focus on both growth and profitability, continue investing in the business through the pandemic, and service firms of all sizes. Finally, they may have concerns about the demand for their Better Employee Transaction Interface (BETI) offering, staffing levels of new business wins, and their stock-based compensation costs