Paycom Software Inc. (NYSE:PAYC)

Return on Assets (ROA)

The Return on Assets shows a declining trend from 9.01% in 2018 down to 5.5% in 2020, indicating a reduction in the efficiency with which the company's assets generate profit during this period. However, from 2020 onwards, ROA demonstrates a gradual recovery, increasing to 6.09% in 2021 and further to 7.21% in 2022, suggesting an improvement in asset utilization efficiency in recent years.

Financial Leverage

The Financial Leverage ratio exhibits a consistent downward trajectory over the analyzed years, starting at 4.55 in 2018 and declining steadily to 3.3 by 2022. This reduction in leverage implies a gradual decrease in reliance on borrowed funds relative to equity, which may reflect a strategy to strengthen the company's capital structure and reduce financial risk.

Return on Equity (ROE)

Return on Equity declines significantly from 40.95% in 2018 to 21.88% in 2020, mirroring the trend observed in ROA and indicating a decrease in profitability from shareholders' perspective during this period. In the subsequent years, ROE stabilizes with minor improvements, recording 21.93% in 2021 and a more pronounced increase to 23.79% in 2022. This partial recovery suggests some restoration of profitability, possibly linked to improved asset efficiency and reduced financial leverage.

Net Profit Margin

The net profit margin demonstrated a declining trend from 24.2% in 2018 to a low of 17.05% in 2020, indicating a reduction in profitability relative to revenue. However, this was followed by a recovery, with the margin increasing to 20.46% by 2022, suggesting an improvement in cost management or pricing strategy over the latter years.

Asset Turnover

Asset turnover exhibited minor fluctuations, starting at 0.37 in 2018 and decreasing to 0.3 in 2019. It then gradually increased each year to reach 0.35 in 2022. This pattern reflects a modest improvement in the efficiency of using assets to generate revenue after the initial decline.

Financial Leverage

Financial leverage consistently decreased from 4.55 in 2018 to 3.3 in 2022. This reduction indicates a steady decrease in the reliance on debt or other liabilities, which may contribute to lower financial risk and a more conservative capital structure over the period.

Return on Equity (ROE)

Return on equity dropped markedly from 40.95% in 2018 to 21.88% in 2020, mirroring the decline observed in net profit margin and potentially impacted by lower leverage. Following this decline, ROE stabilized and showed slight improvement, reaching 23.79% in 2022, indicating a moderate recovery in generating shareholder returns.

Tax Burden

The tax burden ratio showed minor fluctuations over the period, starting at 0.78 in 2018 and peaking at 0.8 in 2019. It remained stable through 2020 and 2021 at approximately 0.77 before decreasing to 0.72 in 2022, suggesting an improvement in the effective tax rate or tax efficiency in the most recent year.

Interest Burden

The interest burden remained consistently high, maintaining a perfect ratio of 1 from 2018 through 2021. In 2022, a slight decline to 0.99 was observed, indicating minimal impact from interest expenses on earnings before tax.

EBIT Margin

The EBIT margin declined notably from 30.98% in 2018 to 22.1% in 2020, reflecting a reduction in operating profitability. However, starting in 2021, the margin recovered to 24.25% and further improved to 28.51% in 2022, signaling a positive trend in operational efficiency or cost control.

Asset Turnover

Asset turnover started at 0.37 in 2018, decreased to 0.3 in 2019, and then gradually increased over the subsequent years, reaching 0.35 by the end of 2022. This pattern indicates initial reduced efficiency in using assets to generate revenue, followed by a steady improvement.

Financial Leverage

Financial leverage demonstrated a consistent downward trend, declining from 4.55 in 2018 to 3.3 in 2022. This reduction suggests a gradual decrease in the reliance on debt financing or an improvement in equity relative to assets over time.

Return on Equity (ROE)

Return on equity declined sharply from 40.95% in 2018 to 21.88% in 2020, aligning with the drop in profitability and operational efficiency noted earlier. It stabilized around 21.9% in 2021 and showed a slight recovery to 23.79% in 2022, reflecting modest improvement in generating shareholder returns.

Net Profit Margin

The net profit margin exhibited a decline from 24.2% in 2018 to a low of 17.05% in 2020. Following this decrease, the margin showed a recovery trend, increasing to 18.57% in 2021 and further to 20.46% in 2022. Despite the recent upward movement, the margin in 2022 remains below the 2018 and 2019 levels, indicating some pressures on profitability during the period but partial improvement towards the end.

Asset Turnover

The asset turnover ratio showed an initial decrease from 0.37 in 2018 to 0.3 in 2019, suggesting a reduction in the efficiency of using assets to generate revenue. From 2019 onwards, the ratio experienced a gradual recovery, increasing to 0.32 in 2020, 0.33 in 2021, and reaching 0.35 in 2022. This trend points to an improving asset utilization over the latter years, yet it has not returned to the 2018 peak.

Return on Assets (ROA)

ROA declined from 9.01% in 2018 to 5.5% in 2020, reflecting a significant drop in overall asset profitability during this period. Subsequently, the metric showed a positive trajectory, rising to 6.09% in 2021 and further to 7.21% in 2022. While the ROA in 2022 has not reached the initial 2018 level, the upward trend indicates improving profitability relative to total asset base.

The financial data reveals various trends in the company's operational efficiency and profitability over the five-year period ending in December 2022.

Tax Burden Ratio

The tax burden ratio experienced slight fluctuations, starting at 0.78 in 2018 and peaking at 0.8 in 2019 before gradually declining to 0.72 by 2022. This decreasing trend in the latter years suggests a reduction in the proportion of earnings paid as taxes, potentially implying improved tax efficiencies or changes in tax policy.

Interest Burden Ratio

This ratio remained stable at 1.0 from 2018 through 2021, indicating no interest expense impact on earnings before tax during these years. In 2022, it marginally fell to 0.99, suggesting a very slight increase in interest expenses but overall continued low leverage or interest burden.

EBIT Margin (%)

The EBIT margin exhibited significant variation. Initially high at approximately 31.0% in 2018 and 30.8% in 2019, it declined sharply to 22.1% in 2020. Subsequently, it recovered to 24.3% in 2021 and rose further to 28.5% in 2022. This pattern indicates a dip in operating profitability during 2020, possibly due to external challenges or increased costs, followed by a notable rebound in operating efficiency.

Asset Turnover Ratio

The asset turnover ratio demonstrated a modest downward shift from 0.37 in 2018 to 0.3 in 2019, then gradually increased each year reaching 0.35 by 2022. This suggests an initial decline in asset efficiency but an ongoing effort to improve the use of assets to generate revenues in subsequent years.

Return on Assets (ROA) (%)

ROA showed a declining trend from 9.01% in 2018 to a low of 5.5% in 2020, reflecting reduced overall profitability relative to assets. Thereafter, ROA increased to 6.09% in 2021 and 7.21% in 2022, indicating a recovery in asset profitability though still below initial levels.

Overall, the data suggests the company faced challenges around 2020 that impacted operating profitability and asset returns, potentially related to external economic conditions. Since then, there has been a progressive improvement in both profitability margins and asset efficiency, accompanied by a stable and slightly improving tax situation. Interest expenses have remained minimal throughout the period.

Tax Burden

The tax burden ratio shows a generally stable trend from 2018 to 2021, fluctuating slightly between 0.77 and 0.8. In 2022, there is a noticeable decline to 0.72, suggesting an improvement in the company's effective tax rate or tax efficiency during the most recent period.

Interest Burden

The interest burden ratio remains consistently at 1.0 from 2018 through 2021, indicating no interest expense impact on earnings before tax in those years. In 2022, a slight decrease to 0.99 occurs, which may indicate the beginning of minimal interest expenses affecting pre-tax profits, though the impact is negligible overall.

EBIT Margin

The EBIT margin experiences a downward trend from 30.98% in 2018 to a low of 22.1% in 2020, indicating reduced operating profitability during that period. From 2020 onward, the margin recovers, rising to 24.25% in 2021 and further to 28.51% in 2022, though it does not fully return to the initial 2018 level. This pattern suggests operating performance was challenged around 2020 but improved in subsequent years.

Net Profit Margin

The net profit margin mirrors the pattern of the EBIT margin, declining from 24.2% in 2018 to 17.05% in 2020. Following this, there is a positive recovery with margins increasing to 18.57% in 2021 and 20.46% in 2022. Despite the improvement, the margin remains below the earlier 2018 and 2019 levels, implying partial restoration of net profitability after the dip.