PAYC vs PAYX vs ADP

For growth investors, Paycom Software, Inc.

(PAYC) is the stronger pick with 8. 9% revenue growth year-over-year, versus 5. 6% for Paychex, Inc. (PAYX). Paycom Software, Inc. (PAYC) offers the better valuation at 15. 6x trailing P/E (12. 0x forward), making it the more compelling value choice. Analysts rate Paycom Software, Inc. (PAYC) a "Hold" — based on 36 analyst ratings — the highest consensus in this comparison. The "better buy" depends entirely on your goals: growth investors should weight revenue trajectory, value investors should weight P/E and PEG, and income investors should weight dividend yield and streak.

On trailing P/E, Paycom Software, Inc.

(PAYC) is the cheapest at 15. 6x versus Automatic Data Processing, Inc. at 20. 8x. On forward P/E, Paycom Software, Inc. is actually cheaper at 12. 0x. The PEG ratio (P/E divided by earnings growth rate) is the most growth-adjusted single valuation metric: Paycom Software, Inc. wins at 0. 51x versus Paychex, Inc. 's 1. 95x — a PEG below 1. 0 traditionally signals the market is underpricing earnings growth.

Over the past 5 years, Automatic Data Processing, Inc.

(ADP) delivered a total return of +19. 5%, compared to -59. 9% for Paycom Software, Inc. (PAYC). Over 10 years, the gap is even starker: PAYC returned +250. 2% versus PAYX's +130. 2%. Past returns do not guarantee future results, and the stock with the higher historical return may already have its best growth priced in.

By beta (market sensitivity over 5 years), Automatic Data Processing, Inc.

(ADP) is the lower-risk stock at 0. 37β versus Paycom Software, Inc. 's 0. 59β — meaning PAYC is approximately 56% more volatile than ADP relative to the S&P 500. On balance sheet safety, Paycom Software, Inc. (PAYC) carries a lower debt/equity ratio of 9% versus 146% for Automatic Data Processing, Inc. — giving it more financial flexibility in a downturn.

By revenue growth (latest reported year), Paycom Software, Inc.

(PAYC) is pulling ahead at 8. 9% versus 5. 6% for Paychex, Inc. (PAYX). On earnings-per-share growth, the picture is similar: Automatic Data Processing, Inc. grew EPS 9. 7% year-over-year, compared to -9. 4% for Paycom Software, Inc.. Over a 3-year CAGR, PAYC leads at 14. 3% annualised revenue growth. Higher growth typically commands a higher valuation multiple — check whether the premium P/E or P/S is justified by the growth rate using the PEG ratio.

Paychex, Inc.

(PAYX) is the more profitable company, earning 29. 7% net margin versus 19. 8% for Automatic Data Processing, Inc. — meaning it keeps 29. 7% of every revenue dollar as bottom-line profit. Operating margin tells a similar story: PAYX leads at 39. 6% versus 26. 3% for ADP. At the gross margin level — before operating expenses — PAYC leads at 78. 6%, reflecting greater pricing power or product mix advantage. Stronger margins indicate durable pricing power, lower cost of revenue, or higher mix of software/services. They are one of the clearest signs of business quality.

The PEG ratio (forward P/E divided by expected earnings growth rate) is the most precise measure of undervaluation relative to growth potential.

By this metric, Paycom Software, Inc. (PAYC) is the more undervalued stock at a PEG of 0. 51x versus Paychex, Inc. 's 1. 95x. A PEG below 1. 0 is traditionally considered the threshold for growth-adjusted undervaluation. On forward earnings alone, Paycom Software, Inc. (PAYC) trades at 12. 0x forward P/E versus 18. 8x for Automatic Data Processing, Inc. — 6. 7x cheaper on a one-year earnings basis. Analyst consensus price targets imply the most upside for PAYX: 22. 7% to $112. 14.

All stocks in this comparison pay dividends.

Paychex, Inc. (PAYX) offers the highest yield at 4. 4%, versus 1. 2% for Paycom Software, Inc. (PAYC).

For long-horizon retirement investors, Automatic Data Processing, Inc.

(ADP) is the stronger choice — it scores higher on the combination of lower volatility, dividend reliability, and long-term compounding (low volatility (β 0. 37), 2. 8% yield, +185. 6% 10Y return). Both have compounded well over 10 years (ADP: +185. 6%, PAYC: +250. 2%), confirming both are viable long-term holds — but the lower-volatility option typically results in less emotional selling during corrections. Retirement portfolios generally favour predictability over maximum returns. Consult a financial advisor before making allocation decisions.

These companies operate in different sectors (PAYC (Technology) and PAYX (Industrials) and ADP (Industrials)), which means they face different economic cycles, regulatory environments, and macro sensitivities — making direct comparison nuanced.

In terms of investment character: PAYC is a small-cap deep-value stock; PAYX is a mid-cap income-oriented stock; ADP is a mid-cap quality compounder stock. These fundamental differences mean investors should not choose between them on a single metric — the "better stock" depends entirely on which of these characteristics aligns with your investment strategy.