Paycom (NYSE:PAYC) Software, Inc. (NYSE:PAYC) CEO, President, and Chairman Chad Richison has recently sold a portion of his holdings in the company, according to the latest filings. The transactions, which occurred on June 7, 2024, resulted in the sale of company stock totaling approximately $567,514.
The sale prices for these transactions ranged from $143.72 to $147.21. Specifically, shares were sold in multiple transactions at prices between $143.17 to $144.01, $144.70 to $145.65, $145.71 to $146.60, and $146.96 to $147.39. These price ranges indicate a weighted average for the shares sold in each set of transactions.
Following the sales, Richison's directly owned shares in Paycom Software, Inc. have decreased, but he still holds a significant stake in the company. The filings show that after the transactions, Richison directly owns 3,064,658 shares of Paycom stock.
Additionally, it's worth noting that Richison has indirect ownership through entities like Ernest Group, Inc., and several trusts for the benefit of his children and grandchildren, for which he serves as a trustee. These indirect holdings reflect a substantial part of his interest in the company.
The transactions were carried out under a pre-arranged Rule 10b5-1 trading plan, which allows insiders to sell shares at predetermined times to avoid accusations of trading on nonpublic information. This plan was adopted jointly by Richison and Ernest Group, Inc. on February 16, 2024.
Investors often keep a close eye on insider transactions as they can provide insights into the executives' confidence in the company's future prospects. However, it's essential to consider that selling shares does not necessarily indicate a lack of faith in the company's future; there are various reasons why executives may choose to sell stock, including diversifying their investment portfolio or meeting personal financial objectives.
In other recent news, Paycom Software has experienced significant leadership changes and financial developments. The co-CEO's resignation led to BMO Capital maintaining a Market Perform rating on Paycom's shares. The company also appointed a new Chief Operating Officer, Randy Peck, and promoted Matt Paque to Chief Legal Officer and Jennifer Kraszewski to Chief Human Resources Officer.
Paycom has reported an 11% increase in revenue year-over-year, reaching $500 million, with net income and adjusted EBITDA surpassing expectations at $247 million and nearly $230 million, respectively. However, the company maintained its full-year 2024 revenue and adjusted EBITDA guidance, projecting revenues between $1.860 billion and $1.885 billion, and adjusted EBITDA between $720 million and $730 million.
Various analyst firms have adjusted their outlook on Paycom. Mizuho reduced its price target on Paycom shares to $170, citing challenges such as the cannibalization of its Beti product and potential macroeconomic headwinds. TD Cowen also lowered its stock price target to $170 due to a lower-than-anticipated revenue guidance for FY24. BMO Capital Markets reduced the stock price target to $190.00, reflecting uncertainty regarding Paycom's financial model leading into 2025, while Citi set a new stock price target at $193.00.
InvestingPro Insights
Paycom Software, Inc. (NYSE:PAYC) has seen significant insider transactions with CEO, President, and Chairman Chad Richison selling a portion of his holdings. While insider sales can signal various things, it is important to look at the company's financial health and market performance for a broader perspective.
InvestingPro Data for Paycom reveals a strong financial position with a market capitalization of $8.27 billion. The company boasts a healthy gross profit margin of 86.55% for the last twelve months as of Q1 2024, underscoring its efficiency in managing costs relative to revenue. Additionally, Paycom's impressive revenue growth of 18.23% during the same period reflects its expanding market presence.
In terms of valuation, Paycom's P/E ratio stands at 17.89, which adjusts slightly to 17.63 when considering the last twelve months as of Q1 2024. This P/E ratio, coupled with a PEG ratio of 0.33, suggests that the stock might be undervalued relative to its earnings growth potential.
An InvestingPro Tip highlights that management has been aggressively buying back shares, which can often be a sign of confidence in the company's valuation and future prospects. Moreover, Paycom holds more cash than debt on its balance, a reassuring sign for investors concerned about the company's financial stability.
Despite recent price declines, with the stock trading near its 52-week low and experiencing significant drops over the last three to six months, the company's fundamentals remain solid. Paycom's strong profit margins and revenue growth, alongside management's share buybacks, could present a potential opportunity for investors.
For those interested in exploring further, there are additional InvestingPro Tips available for Paycom, which can be accessed at https://www.investing.com/pro/PAYC. These tips provide deeper insights into the company's financial health and market performance. Remember to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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