It's been a good week for Paycom Software, Inc. (NYSE:PAYC) shareholders, because the company has just released its latest yearly results, and the shares gained 3.4% to US$212. Paycom Software reported US$1.9b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$8.92 beat expectations, being 4.8% higher than what the analysts expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Paycom Software after the latest results.

Check out our latest analysis for Paycom Software

Following the latest results, Paycom Software's 17 analysts are now forecasting revenues of US$2.03b in 2025. This would be a satisfactory 7.6% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to dive 28% to US$6.70 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$2.05b and earnings per share (EPS) of US$7.07 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$221, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Paycom Software, with the most bullish analyst valuing it at US$278 and the most bearish at US$187 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that Paycom Software's revenue growth is expected to slow, with the forecast 7.6% annualised growth rate until the end of 2025 being well below the historical 20% p.a. growth over the last five years. Compare this to the 139 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 6.6% per year. Factoring in the forecast slowdown in growth, it looks like Paycom Software is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Paycom Software. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at US$221, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Paycom Software going out to 2027, and you can see them free on our platform here.

You can also see our analysis of Paycom Software's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.