Paycom Software (PAYC) recently launched a national advertising campaign for its IWant AI engine. New data from EY also shows how automation is helping companies curb rising HR labor costs. These updates aim to emphasize Paycom’s investment in practical, efficiency-focused innovation.

Shares of Paycom have swung lower this month after initially rallying on upbeat Q2 earnings and buzz around its new AI-powered features. While the 30-day share price return sits at -8.6%, momentum may be moderating. Investors who held through the last year still saw a 22.8% total shareholder return, a strong result compared to peers and a testament to how efficiency-driven innovation is shaping sentiment in the HR tech space.

If the recent advances in workplace automation have sparked your curiosity, it might be worth seeing which tech and AI stocks are gaining attention. See the full list for free.

With shares trading below analyst targets and automation bringing measurable cost savings, investors are left to consider whether Paycom is undervalued at these levels or if expectations for future growth are already reflected in the price.

Most Popular Narrative: 19% Undervalued

Compared to the most widely followed narrative's fair value estimate of $246.69, Paycom's recent closing price of $199.50 appears to offer a notable discount. This narrative centers its valuation on recurring revenue momentum, margin potential, and how new automation technology might reshape the company’s financial outlook.

Automation and AI-driven product innovation, combined with Paycom's unified single database architecture, are driving salesforce productivity gains, increased client satisfaction, and higher client retention rates. These factors are expected to strengthen long-term net margins and support future earnings stability.

Curious about what’s powering this undervalued call? The story hinges on sustained top-line growth and a margin expansion playbook that not every competitor can match. The projected leap in bottom line and assumptions about long-term profitability raise provocative questions. What’s behind these bold numbers, and could this set a new benchmark for the sector?

Result: Fair Value of $246.69 (UNDERVALUED)

However, accelerating AI adoption across competitors or higher than expected ongoing infrastructure costs could challenge Paycom's margins and competitive edge in the coming years.

Build Your Own Paycom Software Narrative

If you have a different perspective or want to analyze the data on your own terms, you can build your own Paycom narrative in just minutes. Do it your way

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Paycom Software.

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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.