Paycom (NYSE:PAYC) Software, Inc.'s (NYSE:PAYC) CEO, President, and Chairman, Chad R. Richison, has recently sold a significant amount of company stock, according to a new SEC filing. The transactions, which occurred on October 2, 2024, involved a series of sales totaling over $649,821.
The sales were executed at varying prices, with the range for the transactions falling between $165.91 and $167.63. The filing indicates that these sales were part of a prearranged trading plan, which allows insiders to sell shares at predetermined times to avoid any accusations of insider trading.
Richison's transactions involved multiple sales of Paycom's common stock. The reported prices represent weighted averages, and the actual sales occurred at various prices within the specified ranges. Detailed information about the number of shares sold at each price point within the range is available upon request to Paycom Software, Inc., its security holders, or the SEC staff.
The SEC filing also reveals that Richison's stock ownership following the transactions remains substantial, with direct ownership of 2,791,410 shares and indirect ownership through Ernest Group, Inc., which is controlled by Richison and trusts for his children. Additionally, Richison is linked to various trusts that hold Paycom shares for the benefit of his family members, indicating a continued vested interest in the company's performance.
Investors often monitor insider sales as they can provide insights into executives' perspectives on the company's future performance. However, it's important to note that such sales do not always indicate a lack of confidence in the company and can be motivated by a variety of personal financial planning reasons.
Paycom Software, Inc., headquartered in Oklahoma City, specializes in providing cloud-based human capital management software solutions and remains a key player in the prepackaged software industry.
In other recent news, Paycom Software reported a 9% increase in Q2 2024 revenue, reaching $438 million, and a GAAP net income of $68 million. However, the firm revised its FY24 revenue guidance downward by 40 basis points. In a strategic move, Paycom initiated a significant $1.5 billion share repurchase program. Analysts from TD (TSX:TD) Cowen and BMO (TSX:BMO) Capital maintained their Hold and Market Perform ratings on Paycom, but raised their price targets.
Additionally, TD Cowen has adjusted its revenue estimates for Paycom Software, citing updated federal funds rate assumptions and a slight deceleration in expected ex float growth. This resulted in a new price target of $188 based on a multiple of 24.5 times the estimated enterprise value to free cash flow for the calendar year 2026.
Paycom also announced the retirement of board member Robert J. Levenson and CFO Craig Boelte. The company has not yet announced successors for these positions. These are recent developments that have been reported in the past articles.
InvestingPro Insights
To provide additional context to Chad R. Richison's recent stock sale, let's examine some key financial metrics and insights from InvestingPro for Paycom Software, Inc. (NYSE:PAYC).
As of the latest data, Paycom's market capitalization stands at $9.31 billion. The company's P/E ratio is 20.06, which is relatively low compared to its PEG ratio of 0.38 for the last twelve months as of Q2 2024. This suggests that the stock may be undervalued relative to its earnings growth potential.
One of the InvestingPro Tips highlights that Paycom holds more cash than debt on its balance sheet, indicating a strong financial position. This solid financial footing may provide reassurance to investors in light of the CEO's stock sale.
Another notable InvestingPro Tip points out Paycom's impressive gross profit margins. Indeed, the data shows a gross profit margin of 86.1% for the last twelve months as of Q2 2024, which is exceptionally high and speaks to the company's operational efficiency.
Despite the recent insider sale, Paycom has demonstrated strong financial performance. The company's revenue for the last twelve months as of Q2 2024 was $1.78 billion, with a healthy revenue growth of 14.17% over the same period. Additionally, the EBITDA growth was an impressive 34.72%, outpacing revenue growth and suggesting improving profitability.
It's worth noting that while the stock has seen a strong return of 16.77% over the last three months, it's still trading at 59.49% of its 52-week high. This could indicate potential upside if the company continues to perform well.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights. In fact, there are 11 more InvestingPro Tips available for Paycom, which could provide valuable perspectives on the company's financial health and market position.
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