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Paycom Software Inc

PAYCStrike zoneExpectations · modest

Held by 5 superinvestors.

Price$232.31
Margin of safety−48%
Holders5
Total value$449.7M

SEC 10-K · fundamentals

Business quality

as of 2025-12-31

Valuation basis: trailing twelve months to 2026-06-30 — latest 10-K plus unaudited 10-Q filings.

Revenue growth
+8.9%
Net margin
22.1%
ROE
26.2%
FCF margin
19.9%
Revenue $841.4M → $2.05B · 6y
What makes a business high quality

Valuation · value band

Margin of safety

$449/ sh · growth-anchored intrinsic value
margin of safety
fair value
above fair value
$232
cheaperpricier

Zero-growth floor

$83

Central IV

$449

Optimistic top

$588

Paycom Software Inc (PAYC): Two methods value the business — a conservative owner-earnings DCF and a growth-credited Greenwald estimate, $83–$588 / sh. Today’s price sits below both (price $232 as of 2026-08-26).

The middle figure is the main read. The right end is the optimistic case under the same conservative caps — not an absolute ceiling.

Revenue growth 20% (lower of historical trend and fundamental cap, capped by moat) · moat 20 yr · discount 10.6% · Zero-growth downside $83

Price as of 2026-08-26 · yahoo · DGS10 4.6% @ 2026-08-25.

Method & numbers

Model cautions

  • The two methods’ midpoints differ materially — growth assumptions warrant review (over 20%).
  • Growth nearly matches the discount rate — the estimate is sensitive to assumptions.

A conservative intrinsic-value band (zero-growth floor to growth-capped DCF) plus a tangible asset floor — not investment advice, not a buy/sell signal, and not a price target.

Owner-earnings DCF $126.10 – $587.50 · Greenwald $175.20 – $375.05 (neutral $281.91) · zero-growth base $105.91 · reproduction $21.84

Moat Franchise (moat) · terminal value 34% of present value · owner-earnings yield 4% vs 10Y 4.6%.

Graham earnings-power value (normalized NOPAT)$83.87 – $105.91 / sh

Normalized NOPAT = average operating margin over the years shown × latest-year revenue × (1 − normalized tax); then + D&A − maintenance capex (write A). Unlevered (pre-interest, attributable to all capital). Capitalized at the 9–11% rate band (read as a WACC proxy). Enterprise → equity bridge applied: + cash − total debt.

Years: TTM 2026-06-30, 2024, 2023, 2022, 2021

v1 simplifications: Maintenance capex (ok) deducted in full cash (write A): EPV = (NOPAT + D&A − maintenance capex) / WACC; no tax shield on the capex term. Share-based compensation is left as a real expense (not added back).

Buffett owner-earnings value$83.01 – $101.45 / sh

Owner earnings = average net income + average D&A − maintenance capex (zero-growth floor; no ΔNWC). Levered (starts from net income, already after interest — an equity-holder stream). Capitalized at the 9–11% rate band (read as a cost-of-equity proxy). No enterprise→equity bridge: the capitalized result is already equity value (subtracting debt would double-count interest).

Years: TTM 2026-06-30, 2024, 2023, 2022, 2021

v1 simplifications: Owner earnings = net income + D&A − maintenance capex (ok); the working-capital change is excluded (maintenance ΔNWC ≈ 0; growth ΔNWC is carried in growth value, not double-counted). One-time items are not separately normalized (multi-year averaging smooths them partially). Share-based compensation is left as a real expense (not added back); see the SBC/OE disclosure. Capitalized at the 9–11% band as a cost-of-equity proxy; no leverage premium applied (net cash or debt within the no-charge range).

Reproduction value = tangible net assets $489.00M + capitalized R&D $513.71M（FY 2026, 2024, 2023, 2022） = $21.84 / sh. Reproduction value = tangible net assets (equity − goodwill − intangibles) + capitalized R&D (5y straight-line), ÷ diluted shares.

Moat reading: Franchise test compares earnings power (EPV) against reproduction value on both AV_conservative (tangible + capitalized R&D) and AV_reproduction (conservative + acquired-reset proxy). Both must clear the franchise multiple for a moat signal; near it, a commodity; below it, value destruction. A directional reading, not a verdict.

Assumes a wide moat · competitive-advantage period ≈ 20 years (earnings intact, ROIC stable over history).

Growth value: if the moat holds for 20 yr at ROIIC ≈ 114%, $69.29–$269.15 / sh (neutral $176.01). Conservative, not a forecast.

Window TTM 2026-06-30, FY 2024, 2023, 2022, 2021 · discount band 9%–11% · normalized tax 21% (Average effective tax rate over 5 year(s), capped at the statutory 21%.) · diluted shares.

Owner-earnings DCF: growth g₁ 20% · OE FY TTM 2026-06-30, 2024, 2023, 2022, 2021 · Discount band: 9.14%–12.00% (DGS10 +4.5% to a 12% strict end, as of 2026-08-25). No enterprise→equity bridge: owner earnings already flow to shareholders (post-interest), so no net cash is added and no debt subtracted — matching the engine owner-earnings lamp. Two-method midpoint gap 46%.

Valuation basis: trailing twelve months to 2026-06-30 — latest 10-K plus unaudited 10-Q filings.

What the price is betting

Today's price pencils in about 12.0% a year in owner-earnings for the next few years. Revenue actually grew 20.1% a year.

Below what it has already done.

Roughly, the price needs its historical revenue growth to run about 7 more years to hold up.

How to read intrinsic value

SEC 13F · holders

Superinvestors Holding This Security

5 holders · $449.7M combined · this quarter +1 opened / -1 exited

This quarter1 opened2 added1 trimmed1 exited
Holders 5 → 5 · last 8q
Exited this quarter (1)
Polen Capital

SEC 13F · notes

Written summary

Paycom Software Inc (PAYC) is held by 5 of the superinvestors tracked on Compounder, with a combined $449.7M in reported 13F value. The largest position belongs to Bill Nygren, where it makes up 0.6% of the portfolio.

Other notable holders by value include Terry Smith (0.1% of its book), Jeremy Grantham (0.0% of its book) and Robert Vinall (0.7% of its book).

Over the latest quarter, 1 of the tracked filers opened a new position in PAYC, 2 added to existing ones, 1 trimmed, and 1 sold out entirely.

Holder counts and values reflect the most recent SEC Form 13F filings, through the quarter ended 2026-06-30. Source: SEC EDGAR. A 13F shows only long US-listed positions and can lag the real portfolio by up to 45 days, so this is disclosed long ownership, not a complete picture.

How to read a 13F

SEC 13F · co-ownership

Also held by these investors

Investors holding Paycom Software Inc (PAYC) also commonly hold →

PAYC's price sits below its conservative value band. See the full strike-zone list

Also on

Sources· SEC EDGAR 13F as of 2026-06-30 · filed 2026-08-14

Educational data only — not investment advice. 13F positions are self-reported and can lag up to 45 days.

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