Investors in Paycom Software, Inc. (NYSE:PAYC) had a good week, as its shares rose 9.8% to close at US$249 following the release of its quarterly results. Revenues were US$531m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$2.48, an impressive 25% ahead of estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. 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.

We've discovered 2 warning signs about Paycom Software. View them for free.NYSE:PAYC Earnings and Revenue Growth May 9th 2025

Following the latest results, Paycom Software's 19 analysts are now forecasting revenues of US$2.03b in 2025. This would be a reasonable 6.1% improvement in revenue compared to the last 12 months. Statutory per share are forecast to be US$7.09, approximately in line with the last 12 months. In the lead-up to this report, the analysts had been modelling revenues of US$2.03b and earnings per share (EPS) of US$6.68 in 2025. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

See our latest analysis for Paycom Software

The consensus price target rose 6.0% to US$235, suggesting that higher earnings estimates flow through to the stock's valuation as well. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Paycom Software, with the most bullish analyst valuing it at US$278 and the most bearish at US$203 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Paycom Software's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 8.2% growth on an annualised basis. This is compared to a historical growth rate of 20% over the past five years. Compare this to the 137 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 6.9% per year. So it's pretty clear that, while Paycom Software's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

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The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Paycom Software following these results. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Paycom Software going out to 2027, and you can see them free on our platform here.

You still need to take note of risks, for example - Paycom Software has  2 warning signs  we think you should be aware of.

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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.

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