Contrasting Intuit (INTU) and Paycom Software (PAYC)

Intuit (NASDAQ: INTU) and Paycom Software (NYSE:PAYC) are both mid-cap computer and technology companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, valuation, dividends, risk, profitability, analyst recommendations and institutional ownership.

Earnings and Valuation

This table compares Intuit and Paycom Software’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Intuit $5.18 billion 7.05 $1.63 billion $3.72 38.21
Paycom Software $382.87 million 11.32 $73.92 million $0.93 80.42

Intuit has higher revenue and earnings than Paycom Software. Intuit is trading at a lower price-to-earnings ratio than Paycom Software, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

86.1% of Intuit shares are owned by institutional investors. Comparatively, 86.1% of Paycom Software shares are owned by institutional investors. 5.7% of Intuit shares are owned by company insiders. Comparatively, 17.9% of Paycom Software shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Dividends

Intuit pays an annual dividend of $1.36 per share and has a dividend yield of 1.0%. Paycom Software does not pay a dividend. Intuit pays out 36.6% of its earnings in the form of a dividend.

Analyst Ratings

This is a summary of recent recommendations and price targets for Intuit and Paycom Software, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Intuit 0 7 9 0 2.56
Paycom Software 0 3 9 0 2.75

Intuit currently has a consensus price target of $140.33, indicating a potential downside of 1.26%. Paycom Software has a consensus price target of $76.92, indicating a potential upside of 2.85%. Given Paycom Software’s stronger consensus rating and higher possible upside, analysts clearly believe Paycom Software is more favorable than Intuit.

Risk & Volatility

Intuit has a beta of 1.15, meaning that its stock price is 15% more volatile than the S&P 500. Comparatively, Paycom Software has a beta of 1.75, meaning that its stock price is 75% more volatile than the S&P 500.

Profitability

This table compares Intuit and Paycom Software’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Intuit 18.76% 82.43% 22.68%
Paycom Software 14.28% 35.77% 4.63%

About Intuit

Intuit Inc. is a provider of business and financial management solutions for small businesses, consumers and accounting professionals. The Company operates through three segments: Small Business, Consumer Tax and ProConnect. The Small Business segment serves and advises small businesses and the accounting professionals, and includes QuickBooks financial and business management online services and desktop software, payroll solutions, and payment processing solutions. The Small Business segment also includes third-party applications that integrate with the Company’s offerings. The Consumer Tax segment targets consumers and includes TurboTax products and services, which enable individuals to prepare and file their own federal and state personal income tax returns. The ProConnect segment targets professional accountants in the United States and Canada. Its ProConnect professional tax offerings include Lacerte, ProSeries, ProFile and ProConnect Tax Online.

About Paycom Software

Paycom Software, Inc. is a provider of a cloud-based human capital management (HCM) software solution delivered as Software-as-a-Service (SaaS). The Company provides functionality and data analytics that businesses need to manage the complete employment life cycle from recruitment to retirement. The Company’s applications streamline client processes and provide clients and their employees with the ability to directly access and manage administrative processes, including applications that identify candidates, on-board employees, manage time and labor, administer payroll deductions and benefits, manage performance, terminate employees and administer post-termination health benefits, such as COBRA. The Company’s solution allows clients to analyze employee information to make business decisions. The Company’s HCM solution offers a range of applications, including talent acquisition, time and labor management, payroll, talent management and human resources (HR) management.

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