Paycom Software
PAYC
announced that its board of directors has approved the renewal of its share repurchase program to buy back up to $550 million of its common stock for another two years.
The shares repurchase program permits the buyback of the company’s outstanding shares through privately negotiated transactions and/or market purchases. The current share repurchase plan with a two-year expiry will be completed on Jun 7, 2024.
During first-quarter 2022, Paycom repurchased 594 shares of its common stock. PAYC did not repurchase any shares in 2021. Earlier in May 2021, the company had authorized the repurchase of up to $300 million of shares, which will expire on May 13, 2023.
Paycom Software, Inc. Price and Consensus
Paycom Software, Inc. price-consensus-chart
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Paycom Software, Inc. Quote
The stock-buyback program at Paycom has been in effect since May 2016 and the allotted capital has been refilled depending on fund availability. However, PAYC is not obligated to buy back any specific number of shares, and the program might be terminated at any point in time depending on general market and economic conditions and several other factors. Since 2016, it has bought back approximately $250 million of stocks.
The latest extension of share repurchasing actions is a prudent way of maximizing shareholders’ wealth and generating more value. Prior to the extension, the company had approximately $166.8 million available for repurchases. Paycom’s latest stock buyback program indicates its commitment to delivering a long-term shareholder value and reflects its confidence in its financial position and ability to generate sufficient cash flows.
Speaking of Paycom’s financial position, the company is rich in cash and boasts a sturdy cash-flow generating ability. It ended the first quarter of 2022 with cash and cash equivalents of $360.6 million. As of Mar 31, 2022, the company’s net debt totalled $28.7 million. During first-quarter 2022, PAYC generated operating cash flow of $117.2 million.
Shares of PAYC declined 5.9% in the past year, compared with Zacks
Computer and Technology
sector’s decrease of 18.1%. Some other companies from this sector which have a consistent record of returning value through share repurchases and dividend payments are
Apple
AAPL
,
Microsoft
MSFT
and
Cisco
CSCO
.
In fiscal 2021, Apple returned approximately $100.5 billion through dividend payouts ($14.5 billion) and share repurchases ($86 billion). Microsoft paid $16.5 billion in dividends and repurchased its common stock worth $27.4 billion in fiscal 2021. Cisco bought back $2.9 billion of its common stock and paid $6.2 billion in dividends in fiscal 2021.
Share repurchase initiatives are expected to raise the market value of the stock and enhance shareholder returns. It boosts a company’s key financial metrics such as earnings per share and lowers price-earnings ratio by reducing the number of shares outstanding. However, buyback of shares does not act as a stable source of income while dividend payout does.
Paycom currently carries a Zacks Rank #2 (Buy), while Apple, Microsoft and Cisco all carry a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Shares of AAPL and MSFT jumped 17.3% and 7.8%, respectively, in the last year. CSCO share price fell 15.9% in the same time frame.
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