Analysis of Investments
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- Income Statement
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Price to FCFE (P/FCFE)
- Net Profit Margin since 2014
- Operating Profit Margin since 2014
- Return on Assets (ROA) since 2014
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Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities
Paycom Software Inc., adjustment to net income
US$ in thousands
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
- Reported net income
- The reported net income demonstrated an overall upward trend from 2018 to 2022. Starting at $137,065 thousand in 2018, it increased significantly to $180,576 thousand in 2019. However, there was a decline in 2020, with net income dropping to $143,453 thousand. Subsequently, this figure recovered and rose steadily, reaching $195,960 thousand in 2021 and experiencing a substantial increase to $281,389 thousand in 2022.
- Adjusted net income
- The adjusted net income followed a similar trajectory as the reported net income, indicating consistent adjustments made by the company across the periods. The figures were identical to the reported net income from 2018 through 2021, showing no adjustment during these years. In 2022, however, the adjusted net income was slightly lower than the reported figure, amounting to $277,686 thousand compared to $281,389 thousand. This suggests some adjustments in the latest period that marginally reduced the net income on an adjusted basis.
- Overall observations
- The data reveal a pattern of growth despite a downturn in 2020, which could be attributed to economic or operational challenges faced that year. The recovery and significant growth in both reported and adjusted net income in 2021 and particularly in 2022 indicate improved profitability and possibly enhanced operational efficiency or revenue growth. The minor difference between reported and adjusted net income in the most recent year suggests that the company made some adjustments that slightly tempered the net income figure but did not substantially alter the overall positive trend.
Adjusted Profitability Ratios: Mark to Market Available-for-sale Securities (Summary)
Paycom Software Inc., adjusted profitability ratios
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
- Net Profit Margin Trends
- The reported net profit margin experienced a decline from 24.2% in 2018 to a low of 17.05% in 2020, followed by a gradual recovery to 20.46% by the end of 2022. The adjusted net profit margin mirrored this pattern closely, indicating that non-recurring items had minimal impact on margin trends during the period.
- Return on Equity (ROE) Developments
- Reported ROE demonstrated a consistent downward trajectory from an elevated level of 40.95% in 2018 to 21.88% in 2020. Subsequently, it stabilized and showed modest improvement, reaching 23.79% in 2022. Adjusted ROE followed the same pattern, with slightly lower values in 2022, suggesting limited effects from adjustments on equity returns.
- Return on Assets (ROA) Progression
- Reported ROA declined from 9.01% in 2018 to a trough of 5.5% in 2020 but then exhibited a recovery trend enhancing to 7.21% by the end of 2022. Adjusted ROA numbers paralleled this movement, with a marginally lower figure in 2022. This indicates a rebound in asset efficiency and profitability after the 2020 dip.
- Overall Financial Performance Insights
- The data indicates that the company experienced a notable decline in profitability and returns on equity and assets during the period ending in 2020, possibly due to adverse market conditions or operational challenges. From 2021 onward, there is evidence of recovery and gradual improvement in all key profitability metrics. The close alignment between reported and adjusted figures implies that adjustments for extraordinary or non-recurring items had minimal influence on the core profitability assessments during these years.
Paycom Software Inc., Profitability Ratios: Reported vs. Adjusted
Adjusted Net Profit Margin
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
2022 Calculations
1 Net profit margin = 100 × Net income ÷ Revenues
= 100 × ÷ =
2 Adjusted net profit margin = 100 × Adjusted net income ÷ Revenues
= 100 × ÷ =
- Net Income Trends
- The reported net income exhibited a general upward trend from 2018 to 2022. Starting at $137,065 thousand in 2018, it increased significantly to $180,576 thousand in 2019. There was a decline in 2020 to $143,453 thousand, followed by a recovery in 2021 to $195,960 thousand and a notable rise to $281,389 thousand in 2022. The adjusted net income mirrored this pattern closely, with the same values except for 2022 where it was slightly lower at $277,686 thousand.
- Profit Margins Analysis
- Reported net profit margins showed a downward spike in 2020, falling from 24.2% in 2018 and 24.48% in 2019 to 17.05% in 2020. Margins then improved modestly to 18.57% in 2021 and further to 20.46% in 2022, though remaining below the levels seen in 2018 and 2019. Adjusted net profit margins presented a similar pattern, with a dip to 17.05% in 2020 followed by gradual improvement, reaching 20.19% in 2022.
- Insights and Summary
- The data reveals a company experiencing fluctuating profitability, with a significant impact in 2020 where both net income and profit margins declined sharply. This was followed by recovery and growth through 2021 and 2022, culminating in the highest recorded net income in 2022. Despite this income growth, margins in 2022 had not fully returned to pre-2020 peak levels, suggesting increased costs or pricing pressures relative to revenue growth. The close alignment between reported and adjusted figures indicates limited impact from adjustments on profitability metrics.
Adjusted Return on Equity (ROE)
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
2022 Calculations
1 ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × ÷ =
2 Adjusted ROE = 100 × Adjusted net income ÷ Stockholders’ equity
= 100 × ÷ =
- Net Income Trends
- The reported net income demonstrated growth overall, increasing from $137,065 thousand in 2018 to $281,389 thousand in 2022. Despite a decline between 2019 and 2020, where net income decreased from $180,576 thousand to $143,453 thousand, the company experienced a strong recovery in subsequent years, reaching its highest value in 2022. The adjusted net income mirrored these trends closely, with negligible differences in 2022, indicating minimal adjustments to net income figures over time.
- Return on Equity (ROE) Analysis
- The reported ROE showed a decreasing trend from 2018 through 2020, dropping significantly from 40.95% to 21.88%. In 2021 and 2022, the ROE stabilized somewhat, maintaining levels slightly above 21%, then improving to 23.79% by 2022. The adjusted ROE followed an almost identical pattern, with the only notable variation occurring in 2022, where it was marginally lower at 23.48% compared to the reported figure. This suggests consistent adjustments to equity returns over the period, aligning closely with reported metrics.
- Overall Insights
- The company's profitability as measured by net income increased substantially over the five-year horizon, with a strong rebound following a dip in 2020. However, the efficiency of equity utilization, as measured by ROE, declined significantly from its 2018 high and only partially recovered by 2022. The close alignment between reported and adjusted figures suggests that the company's reported financial outcomes are largely reflective of its underlying economic performance without significant one-time adjustments.
Adjusted Return on Assets (ROA)
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
2022 Calculations
1 ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Adjusted net income ÷ Total assets
= 100 × ÷ =
- Net Income
- The reported net income displayed an overall upward trend over the five-year period. It increased from $137,065 thousand in 2018 to $281,389 thousand in 2022, more than doubling in value. However, there was a notable fluctuation in 2020 when net income decreased to $143,453 thousand from $180,576 thousand in 2019 before recovering in subsequent years. The adjusted net income followed a nearly identical pattern, confirming the consistency between reported and adjusted figures, with the adjusted value slightly lower than the reported figure in 2022 ($277,686 thousand compared to $281,389 thousand).
- Return on Assets (ROA)
- The reported ROA showed a declining trend from 9.01% in 2018 to a low of 5.5% in 2020, indicating decreasing efficiency in asset utilization during this period. After 2020, ROA gradually improved, reaching 7.21% in 2022, reflecting a partial recovery in operational efficiency. The adjusted ROA mirrored this pattern closely, with only minimal differences observed in 2022, where the adjusted ROA was slightly lower at 7.12% compared to the reported 7.21%.
- Overall Analysis
- The data suggest the company experienced a period of softening profitability and asset efficiency from 2019 to 2020, potentially due to adverse market or operational conditions during that time. Subsequently, both net income and ROA rebounded, demonstrating recovery and growth in the company's financial performance through to 2022. The close alignment between reported and adjusted figures over the entire period indicates limited or minor adjustments impacting the core earnings and efficiency metrics.