Model N (MODN) versus Paycom Software (PAYC) Critical Contrast

Paycom Software (NYSE: PAYC) and Model N (NYSE:MODN) are both technology companies, but which is the better business? We will compare the two companies based on the strength of their risk, valuation, analyst recommendations, institutional ownership, profitability, dividends and earnings.

Valuation and Earnings

This table compares Paycom Software and Model N’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Paycom Software $433.05 million 11.28 $66.81 million $1.14 74.13
Model N $131.17 million 3.79 -$39.54 million ($1.29) -13.06

Paycom Software has higher revenue and earnings than Model N. Model N is trading at a lower price-to-earnings ratio than Paycom Software, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Paycom Software and Model N, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Paycom Software 0 5 11 0 2.69
Model N 0 2 4 0 2.67

Paycom Software presently has a consensus price target of $88.94, suggesting a potential upside of 5.24%. Model N has a consensus price target of $18.00, suggesting a potential upside of 6.82%. Given Model N’s higher possible upside, analysts plainly believe Model N is more favorable than Paycom Software.

Profitability

This table compares Paycom Software and Model N’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Paycom Software 15.43% 45.18% 6.08%
Model N -26.17% -55.03% -14.12%

Institutional and Insider Ownership

87.1% of Paycom Software shares are held by institutional investors. Comparatively, 65.6% of Model N shares are held by institutional investors. 17.9% of Paycom Software shares are held by insiders. Comparatively, 18.9% of Model N shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility and Risk

Paycom Software has a beta of 1.7, meaning that its stock price is 70% more volatile than the S&P 500. Comparatively, Model N has a beta of 1.06, meaning that its stock price is 6% more volatile than the S&P 500.

Summary

Paycom Software beats Model N on 12 of the 14 factors compared between the two stocks.

Paycom Software Company Profile

Paycom Software, Inc. is a provider of a cloud-based human capital management (HCM) software solution delivered as Software-as-a-Service (SaaS). The Company provides functionality and data analytics that businesses need to manage the complete employment life cycle from recruitment to retirement. The Company’s applications streamline client processes and provide clients and their employees with the ability to directly access and manage administrative processes, including applications that identify candidates, on-board employees, manage time and labor, administer payroll deductions and benefits, manage performance, terminate employees and administer post-termination health benefits, such as COBRA. The Company’s solution allows clients to analyze employee information to make business decisions. The Company’s HCM solution offers a range of applications, including talent acquisition, time and labor management, payroll, talent management and human resources (HR) management.

Model N Company Profile

Model N, Inc. is a provider of revenue management solutions for life science and technology companies. The Company’s solutions enable its customers to maximize revenues and reduce revenue compliance risk by transforming their revenue life cycle from a series of tactical, disjointed operations into a strategic end-to-end process. The Company’s solutions include Revenue Enterprise Cloud, Revenue Intelligence Cloud and Revvy Revenue Management. The Company provides solutions that span the organizational and operational boundaries of functions, such as sales, marketing and finance, and serve as a system of record for revenue management processes, including pricing, contracts, rebates, incentives and regulatory compliance. The Company’s application suites are designed to work with enterprise resource planning (ERP) and customer relationship management (CRM) applications. The Company also offers implementation services, managed services, strategic services and customer support.

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