Paycom Software PAYC recently announced rewards for shareholders in the form of additional share buyback authorization. The enhancement of the repurchase program is in line with its commitment to boosting shareholder value.
Paycom’s board of directors authorized an additional share buyback plan of $550 million. The company’s existing buyback program had approximately $550 million left before the increase. With the new authorization, the repurchase fund value jumps to almost $1.1 billion.
The share repurchase program permits the buyback of the company’s outstanding shares through privately negotiated transactions or open market purchases. The current share repurchase plan, with a two-year expiry, will be completed between Aug 15, 2022 and Aug 15, 2024.
During the first half of 2022, Paycom repurchased common stocks worth $94.7 million. PAYC did not repurchase any shares in 2021. Earlier in June 2022, the company authorized the repurchase of up to $550 million of shares, which was scheduled to expire on Jun 7, 2024.
Paycom Software, Inc. Price and Consensus
Paycom Software, Inc. price-consensus-chart | 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. Paycom’s latest stock buyback program indicates its commitment to delivering 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 second quarter of 2022 with cash and cash equivalents of $279 million. As of Jun 30, 2022, the company’s net long-term debt totaled $29 million. During the first half of 2022, PAYC generated operating cash flow of $169 million.
Apart from strategic investments, a continued focus on shareholder-friendly initiatives should boost the company’s shares. PAYC has rallied 41.7% in the past three months, outperforming the Zacks Internet – Software industry’s increase of 6%.
Currently, Paycom carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some other companies from this sector that have a consistent record of returning value through share repurchases and dividend payouts 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.
Shares of AAPL and MSFT have jumped 16.1% and 10%, respectively, in the last three months. Meanwhile, CSCO’s share price has dropped 7.9% in the same time frame.
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