Is Paycom Software a Buy at a 72% Discount to Its 2021 Peak?

according to Macrotrends, , 2026 as reported by Yahoo Finance, . This sharp correction has sparked debate among investors about whether the pullback reflects a mispricing of the company's long-term value or a recalibration of expectations in a more mature market. A closer examination of Paycom's financial performance, strategic share repurchases, and growth catalysts suggests the current valuation offers a compelling entry point for long-term investors.

Valuation Reset: A Mispricing or Prudent Realignment?

The stock's decline has been attributed to a broader valuation reset in the software sector, as investors adjust to slower growth rates and tighter profit margins. Despite this, Paycom's fundamentals remain robust. For the third quarter of 2025, the company , , . , , according to Q3 earnings.

Valuation metrics further underscore the discount. as highlighted by Sahm Capital, suggesting undervaluation relative to its peers. A discounted cash flow (DCF) analysis estimates an intrinsic value of $408 per share, as reported by Yahoo Finance. Analysts also highlight a fair value of $209.94, as reported by Yahoo Finance. These metrics suggest the market may be underappreciating Paycom's durable cash flow generation and disciplined cost structure.

Strategic Share Repurchases: A Catalyst for Shareholder Value

Paycom's aggressive share repurchase program in Q3 2025 has added another layer of appeal. The company , . This activity, as reported in Q3 results, signals management's confidence in the company's intrinsic value. Share repurchases not only enhance earnings per share (EPS) through reduced dilution but also act as a tailwind for long-term shareholders, particularly in a low-growth environment.

Analysts view these buybacks as a strategic lever to bridge the gap between current valuations and future potential. "The repurchase program demonstrates Paycom's commitment to returning capital to shareholders while maintaining its investment-grade balance sheet," according to a recent report. as reported in Q3 results, the company is effectively using its cash reserves to capitalize on what it perceives as an undervalued equity offering.

Growth Catalysts: AI and Margin Expansion

While revenue growth has decelerated from double digits to high single digits, Paycom's long-term growth story remains intact. The company is investing in AI-driven products like iWant and Beti, which aim to enhance client engagement and retention through automation and predictive analytics. These innovations could drive margin expansion by reducing customer acquisition costs and increasing upsell opportunities.

Conclusion: A Compelling Entry Point

Paycom's 72% discount to its 2021 peak reflects a market recalibration rather than a fundamental deterioration in its business model. The company's strong revenue growth, expanding margins, and strategic share repurchases position it as a compelling opportunity for investors with a multi-year horizon. While near-term volatility remains a risk, the combination of undervaluation, disciplined capital allocation, and AI-driven innovation suggests Paycom is well-positioned to deliver outsized returns as the market re-rates its long-term potential.