Financial Survey: Paycom Software (NYSE:PAYC) vs. AppFolio (NASDAQ:APPF)

AppFolio (NASDAQ:APPF) and Paycom Software (NYSE:PAYC) are both computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, risk, earnings, dividends, analyst recommendations, institutional ownership and profitability.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
AppFolio	17.26%	30.64%	23.53%
Paycom Software	25.78%	32.90%	11.07%

Risk & Volatility

AppFolio has a beta of 0.87, meaning that its stock price is 13% less volatile than the S&P 500. Comparatively, Paycom Software has a beta of 1.14, meaning that its stock price is 14% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and recommmendations for AppFolio and Paycom Software, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AppFolio	1	2	5	0	2.50
Paycom Software	0	11	0	0	2.00

AppFolio currently has a consensus price target of $261.88, indicating a potential upside of 7.97%. Paycom Software has a consensus price target of $196.63, indicating a potential downside of 2.05%. Given AppFolio’s stronger consensus rating and higher possible upside, equities research analysts plainly believe AppFolio is more favorable than Paycom Software.

Institutional & Insider Ownership

85.2% of AppFolio shares are held by institutional investors. Comparatively, 87.8% of Paycom Software shares are held by institutional investors. 5.2% of AppFolio shares are held by insiders. Comparatively, 14.5% of Paycom Software shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares AppFolio and Paycom Software”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AppFolio	$762.37 million	11.56	$2.70 million	$3.59	67.56
Paycom Software	$1.82 billion	6.35	$340.79 million	$8.31	24.16

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

Summary

Paycom Software beats AppFolio on 8 of the 14 factors compared between the two stocks.

About AppFolio

AppFolio, Inc., together with its subsidiaries, provides cloud business management solutions for the real estate industry in the United States. The company provides a cloud-based platform that enables users to automate and optimize common workflows; tools that assist with leasing, maintenance, and accounting; and other technology and services offered by third parties. It offers AppFolio Property Manager Core, a platform that provides the basic functionalities required to operate a property management business, as well as serves as a system of record; AppFolio Property Manager Plus, which offers housing management, student housing management, complex accounting, leasing insights, large-scale operations support, role-based permissions, stack integrations, and enhanced customer support services; AppFolio Property Manager Max offers customer relationship management functionality, field customization, customer database functionality, and customer success management services; and AppFolio Investment Manager, a software that provides investment management, asset management, and relationship management solutions. The company also provides value-added services that are designed to enhance, automate, and streamline processes and workflows for property management businesses, such as electronic payment, tenant screening, and insurance services. AppFolio, Inc. was incorporated in 2006 and is headquartered in Santa Barbara, California.

About Paycom Software

Paycom Software, Inc. provides cloud-based human capital management (HCM) solution delivered as software-as-a-service for small to mid-sized companies in the United States. It offers functionality and data analytics that businesses need to manage the employment life cycle from recruitment to retirement. The company's HCM solution provides a suite of applications in the areas of talent acquisition, including applicant tracking, candidate tracker, background checks, on-boarding, e-verify, and tax credit services; and time and labor management, such as time and attendance, scheduling, time-off requests, labor allocation, labor management reports/push reporting, geofencing/geotracking, and Microfence, a proprietary Bluetooth. Its HCM solution also offers payroll applications comprising better employee transaction interface, payroll and tax management, payroll card, Everyday, Paycom pay, Client Action Center, expense management, mileage tracker/fixed and variable rates, garnishment administration, and GL concierge applications; and talent management applications that include employee self-service, compensation budgeting, performance management, position management, and Paycom learning, as well as my analytics. In addition, its HCM solution provides manager on-the-go that gives supervisors and managers the ability to perform a variety of tasks, such as approving time-off requests and expense reimbursements; direct data exchange; ask here, a tool for direct line of communication to ask work-related questions; document and checklist; government and compliance; benefits administration/benefits to carrier; benefit enrollment service; COBRA administration; personnel action and performance discussion forms; surveys; 401(k) reporting; report center; and affordable care act applications, as well as Clue, which securely collects, tracks, and manages the vaccination and testing data of the workforce. Paycom Software, Inc. was founded in 1998 and is based in Oklahoma City, Oklahoma.