Munger Mode rating: 3 out of 5 — Hold. Our own rating from the research report below, on business quality first: moat durability and management, with price separating the top three.
Paycom is, on the merits, a high-quality cloud-native human capital management ("HCM") business. It owns its software stack end-to-end, runs at adjusted EBITDA margins north of 40%, generates oceans of free cash flow, and is led by a founder who still owns north of 10% of the company. The stock has been more or less cut in half over the trailing year — from $267 to roughly $114 — as growth has decelerated from the 25–30% range of its first decade as a public company to the 6–8% range today. Charlie and I have spent considerable time on this one, and we are of two minds. The favorable case is straightforward: a sticky, mission-critical product, a founder-CEO with skin in the game, ~37% operating margins, a buy-back machine in overdrive, and a forward P/E in the high single digits.
Recent filings analysed: 10-Q (2026-08-06), 8-K (2026-08-05), 8-K (2026-08-03), 8-K (2026-07-09).
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