Paylocity Holding Corporation (PCTY) Discounted Future Market Cap

Paylocity Holding Corporation

PCTY (NASDAQ)

(%)

Valuation
Paylocity Holding Corporation Discounted Future Market Cap

"""
    Model: Discounted Future Market Cap

# Render model description
model.render_description(r"""
## Discounted Future Market Cap

This model estimates the intrinsic value of a common share by projecting the Future Market Capitalization using the estimated PE Ratio and then discounting it to the Present using an Annual Required Rate of Return.
""")

# Initialize assumptions
assumptions.init({
    "data": {
        "%discount_rate": None,
        "beta": data.get("profile:beta", default=1),
        "%risk_free_rate": data.get("treasury:year10"),
        "%market_premium": data.get("risk:totalEquityRiskPremium"),
        "pe_ratio": data.get("ratio:priceEarningsRatio"),
        "%revenue_growth_rate": None,
        "%net_income_margin": None,
        "historical_years": 10,
        "projection_years": 5,
    },
    "hierarchies": [{
        "parent": "%discount_rate",
        "children": ["beta", "%risk_free_rate", "%market_premium"]
    }]
})

# Calculate cost of equity
cost_of_equity = assumptions.get("%risk_free_rate") + assumptions.get("beta") * assumptions.get("%market_premium")
assumptions.set("%discount_rate", cost_of_equity)

# Compute metrics
data.compute({
    "%grossMargin": "income:grossProfit / income:revenue",
    "%operating_margin": "income:operatingIncome / income:revenue",
    "%netMargin": "income:netIncome / income:revenue",
    "%revenueGrowthRate": "function:growth:income:revenue",
    "%netIncomeGrowthRate": "function:growth:income:netIncome",
    "%totalStockholdersEquityGrowthRate": "function:growth:balance:totalStockholdersEquity",

# Calculating NOPAT (Net Operating Profit After Taxes)
    "%taxRate": "income:incomeTaxExpense / income:incomeBeforeTax",
    "incomeTax": "income:operatingIncome * %taxRate",
    "nopat": "income:operatingIncome - incomeTax",

# Calculating Invested Capital
    "investedCapital": [
        "balance:totalNonCurrentAssets", "-", "balance:cashAndCashEquivalents", "+",
        "balance:totalCurrentAssets", "-", "balance:totalCurrentLiabilities"
    ],
    "%roic": "nopat / investedCapital",
})

data.set_default_range(f"{-assumptions.get('historical_years')}->0")

assumptions.set("%net_income_margin", data.average(f"%netMargin"))
assumptions.set_bounds(
    "%net_income_margin", low=0, high="100%"
)

assumptions.set("%revenue_growth_rate", data.average(f"%revenueGrowthRate"))
assumptions.set_bounds(
    "%revenue_growth_rate", low=0, high="25%"
)

# Compute forecasted values and ratios
data.compute({
    "income:revenue": f"""
        income:revenue:-1 * 
        (1 + {assumptions.get('%revenue_growth_rate')})
    """,
    "%revenueGrowthRate": "function:growth:income:revenue",
    "income:netIncome": f"income:revenue * {assumptions.get('%net_income_margin')}",
}, forecast=assumptions.get("projection_years"))

projected_revenue = data.get("income:revenue")
projected_net_income = data.get(f"income:netIncome:{assumptions.get('projection_years')}")

shares_outstanding = data.get("income:weightedAverageShsOut")
future_market_cap = assumptions.get("pe_ratio") * projected_net_income
discounted_future_market_cap = future_market_cap / (
            (1 + assumptions.get("%discount_rate")) ** assumptions.get("projection_years"))

stock_value = discounted_future_market_cap / shares_outstanding

# Set the final value
model.set_final_value({
    "value": stock_value,
    "units": "$"
})

# Render results
model.render_results([
    [stock_value, "Present Value", "$"],
    [projected_net_income, "Estimated net income", "$"],
    [future_market_cap, "Estimated market capitalization", "$"],
    [discounted_future_market_cap, "Market capitalization discounted to present", "$"],
    [shares_outstanding, "Shares Outstanding", "#"],
    [data.get("income:eps"), "Earnings Per Share (EPS)", "$"],
    [data.get("profile:price"), "Market Price", "$"],
    [data.get("ratio:priceEarningsRatio"), "Price to Earnings (PE) Ratio", "#"]
])

# Render chart
model.render_chart({
    "data": {
        "income:revenue": "Revenue",
        "income:netIncome": "Net Income"
    },
    "start": -assumptions.get("historical_years"),
    "end": "*",
    "properties": {
        "title": "Historical and forecasted data",
        "set_editable": [
            "income:revenue",
            "income:netIncome"
        ]
    }
})

# Render table for estimated future values
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
    },
    "start": -1,
    "end": "*",
    "properties": {
        "title": "Estimated Future Values",
        "order": "ascending",
        "number_format": "M"
    }
})

# Render historical values table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "income:costOfRevenue": "Cost of Revenue",
        "income:grossProfit": "Gross Profit",
        "%grossMargin": "Gross Margin",
        "income:operatingIncome": "Operating Income",
        "%operating_margin": "Operating Margin",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Values",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Render historical growth rates table
model.render_table({
    "data": {
        "income:revenue": "Revenue",
        "%revenueGrowthRate": "Revenue Growth Rate",
        "income:netIncome": "Net Income",
        "%netMargin": "Net Margin",
        "%netIncomeGrowthRate": "Net Income Growth Rate",
        "balance:totalStockholdersEquity": "Stockholders Equity",
        "%totalStockholdersEquityGrowthRate": "Equity Growth Rate",
        "%roic": "Return on Invested Capital (ROIC)",
        "nopat": "After-tax Operating Income",
        "%taxRate": "Income Tax Rate",
        "investedCapital": "Invested Capital",
    },
    "start": -assumptions.get("historical_years"),
    "end": 0,
    "properties": {
        "title": "Historical Growth Rates",
        "display_averages": True,
        "order": "descending",
        "number_format": "M"
    },
})

# Set description for assumptions
assumptions.set_description({
    "%discount_rate": r"""
        ## Discount Rate

`Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium`

The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula.

[Read More](https://www.investopedia.com/terms/c/costofequity.asp#mntl-sc-block_1-0-20)
    """,

"beta": r"""
        ## Beta

Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.
    """,

"%risk_free_rate": r"""
        ## Risk-Free Rate

The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time.
        By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.
    """,

"%market_premium": r"""
        ## Market Premium

Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.
    """,

"pe_ratio": r"""
        ## Price to Earnings (PE) Ratio

Estimated Price to Earnings (PE) Ratio at the end of the projection period.

`Future Market Cap` = `PE Ratio` * `Projected Net Income`
    """,

"%revenue_growth_rate": r"""
        ## Revenue Growth Rate

The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.
    """,

"%net_income_margin": r"""
        ## Net Income Margin

Net Income expressed as a percentage of Revenue.
    """,

"historical_years": r"""
        ## Historical Years

The number of historical years used to calculate averages for historical data.
    """,

"projection_years": r"""
        ## Projection Years

The number of years for projecting the analysis into the future.
    """,
})

print("End of model.")

Estimated Value

USD

Market Price USD

* Values are not guaranteed, please do your own
research before making investment decisions.

Discounted Future Market Cap

Interactive Assumptions

Discount Rate Discount Rate `Discount Rate` = `Cost of Equity` = `Risk Free Rate` + `Beta` * `Market Premium` The cost of equity is the theoretical rate of return that an equity investment should generate. It is calculated using the CAPM formula. Read More	%
↳ Beta Beta Beta is a value that measures the price fluctuations (volatility) of a stock with respect to fluctuations in the overall stock market.	#
↳ Risk Free Rate Risk-Free Rate The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over a specified period of time. By default, it is equal to the current yield of the U.S. 10 Year Treasury Bond.	%
↳ Market Premium Market Premium Market risk premium represents the excess returns over the risk-free rate that investors expect for taking on the incremental risks connected to the equities market.	%
Pe Ratio Price to Earnings (PE) Ratio Estimated Price to Earnings (PE) Ratio at the end of the projection period. `Future Market Cap` = `PE Ratio` * `Projected Net Income`	#
Revenue Growth Rate Revenue Growth Rate The annual revenue growth rate is applied to projected revenue starting from the second projection year onward.	%
Net Income Margin Net Income Margin Net Income expressed as a percentage of Revenue.	%
Historical Years Historical Years The number of historical years used to calculate averages for historical data.	#
Projection Years Projection Years The number of years for projecting the analysis into the future.	#

Results
Present Value	170.3 USD
Estimated net income	489.3 Mil. USD
Estimated market capitalization	12.72 Bil. USD
Market capitalization discounted to present	9.29 Bil. USD
Shares Outstanding	54.55 Mil.
Earnings Per Share (EPS)	4.32 USD
Market Price	113.6 USD
Price to Earnings (PE) Ratio	26.01

Historical and forecasted data

Monetary values in USD

{"sectionId": "section-chart-1", "sectionType": "chart", "title": "Historical and forecasted data", "timeseries": "annual", "series": [{"label": "Revenue", "mappingKey": "income:revenue", "data": [{"l": "2016", "x": "2016-06-30", "y": 230701000}, {"l": "2017", "x": "2017-06-30", "y": 300010000}, {"l": "2018", "x": "2018-06-30", "y": 377527000}, {"l": "2019", "x": "2019-06-30", "y": 467633000}, {"l": "2020", "x": "2020-06-30", "y": 561329000}, {"l": "2021", "x": "2021-06-30", "y": 635627000}, {"l": "2022", "x": "2022-06-30", "y": 852651000}, {"l": "2023", "x": "2023-06-30", "y": 1174598000}, {"l": "2024", "x": "2024-06-30", "y": 1402515000}, {"l": "2025", "x": "2025-06-30", "y": 1595221000}, {"l": "2026", "x": "2026-06-30", "y": 1993228639, "oy": 1993228639, "e": true, "d": 2026, "g": 24.95, "og": 24.95}, {"l": "2027", "x": "2027-06-30", "y": 2490539185, "oy": 2490539185, "e": true, "d": 2027, "g": 24.95, "og": 24.95}, {"l": "2028", "x": "2028-06-30", "y": 3111928711, "oy": 3111928711, "e": true, "d": 2028, "g": 24.95, "og": 24.95}, {"l": "2029", "x": "2029-06-30", "y": 3888354925, "oy": 3888354925, "e": true, "d": 2029, "g": 24.95, "og": 24.95}, {"l": "2030", "x": "2030-06-30", "y": 4858499479, "oy": 4858499479, "e": true, "d": 2030, "g": 24.95, "og": 24.95}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}, {"label": "Net Income", "mappingKey": "income:netIncome", "data": [{"l": "2016", "x": "2016-06-30", "y": -3851000}, {"l": "2017", "x": "2017-06-30", "y": 6718000}, {"l": "2018", "x": "2018-06-30", "y": 38598000}, {"l": "2019", "x": "2019-06-30", "y": 53823000}, {"l": "2020", "x": "2020-06-30", "y": 64455000}, {"l": "2021", "x": "2021-06-30", "y": 70819000}, {"l": "2022", "x": "2022-06-30", "y": 90777000}, {"l": "2023", "x": "2023-06-30", "y": 140822000}, {"l": "2024", "x": "2024-06-30", "y": 206766000}, {"l": "2025", "x": "2025-06-30", "y": 227127000}, {"l": "2026", "x": "2026-06-30", "y": 200718123, "oy": 200718123, "e": true, "d": 2026, "g": -11.63, "og": -11.63}, {"l": "2027", "x": "2027-06-30", "y": 250797295, "oy": 250797295, "e": true, "d": 2027, "g": 24.95, "og": 24.95}, {"l": "2028", "x": "2028-06-30", "y": 313371221, "oy": 313371221, "e": true, "d": 2028, "g": 24.95, "og": 24.95}, {"l": "2029", "x": "2029-06-30", "y": 391557340, "oy": 391557340, "e": true, "d": 2029, "g": 24.95, "og": 24.95}, {"l": "2030", "x": "2030-06-30", "y": 489250897, "oy": 489250897, "e": true, "d": 2030, "g": 24.95, "og": 24.95}], "dataType": ".", "displayAs": "line", "dataTimeseries": "annual", "hidden": false}], "editableDates": {"2026-06-30": 16, "2027-06-30": 17, "2028-06-30": 18, "2029-06-30": 19, "2030-06-30": 20}, "properties": {"display_table": true}, "width": "full"}

Edit Chart Values	2026-06-30	2027-06-30	2028-06-30	2029-06-30	2030-06-30

↳ Growth Rate

Estimated Future Values

Monetary values in USD amounts except #	2025 Jun 30	LTM Mar 04	2026 Jun 30	2027 Jun 30	2028 Jun 30	2029 Jun 30	2030 Jun 30
Revenue	1,595	1,680	1,993	2,491	3,112	3,888	4,858
Revenue Growth Rate	13.74%	5.29%	24.95%	24.95%	24.95%	24.95%	24.95%
Net Income	227.1	238.3	200.7	250.8	313.4	391.6	489.3

Monetary values in USD

amounts except #

2025
Jun 30

LTM
Mar 04

2026
Jun 30

2027
Jun 30

2028
Jun 30

2029
Jun 30

2030
Jun 30

Revenue

1,595

1,680

1,993

2,491

3,112

3,888

4,858

Revenue Growth Rate

13.74%

5.29%

24.95%

Net Income

227.1

238.3

200.7

250.8

313.4

391.6

489.3

Historical Values

Monetary values in USD amounts except #	Average	LTM Mar 04	2025 Jun 30	2024 Jun 30	2023 Jun 30	2022 Jun 30	2021 Jun 30	2020 Jun 30	2019 Jun 30	2018 Jun 30	2017 Jun 30	2016 Jun 30
Revenue	843.4	1,680	1,595	1,403	1,175	852.7	635.6	561.3	467.6	377.5	300	230.7
Cost of Revenue	276.5	521.1	498.2	441.7	367	287	219.3	182	153.9	149.2	124	98.08
Gross Profit	566.9	1,158	1,097	960.8	807.6	565.6	416.3	379.3	313.8	228.3	176	132.6
Gross Margin	65.29%	68.97%	68.77%	68.5%	68.75%	66.34%	65.5%	67.58%	67.1%	60.48%	58.67%	57.48%
Operating Income	122	338.1	304	260.1	155	84.59	58.04	66.17	56.22	15.95	7.3	-3.55
Operating Margin	10.81%	20.13%	19.06%	18.54%	13.2%	9.92%	9.13%	11.79%	12.02%	4.23%	2.43%	-1.54%
Net Income	103.1	238.3	227.1	206.8	140.8	90.78	70.82	64.45	53.82	38.6	6.72	-3.85
Net Margin	10.07%	14.19%	14.24%	14.74%	11.99%	10.65%	11.14%	11.48%	11.51%	10.22%	2.24%	-1.67%

Historical Growth Rates

Monetary values in USD amounts except #	Average	LTM Mar 04	2025 Jun 30	2024 Jun 30	2023 Jun 30	2022 Jun 30	2021 Jun 30	2020 Jun 30	2019 Jun 30	2018 Jun 30	2017 Jun 30	2016 Jun 30
Revenue	843.4	1,680	1,595	1,403	1,175	852.7	635.6	561.3	467.6	377.5	300	230.7
Revenue Growth Rate	24.95%	5.29%	13.74%	19.4%	37.76%	34.14%	13.24%	20.04%	23.87%	25.84%	30.04%	51.08%
Net Income	103.1	238.3	227.1	206.8	140.8	90.78	70.82	64.45	53.82	38.6	6.72	-3.85
Net Margin	10.07%	14.19%	14.24%	14.74%	11.99%	10.65%	11.14%	11.48%	11.51%	10.22%	2.24%	-1.67%
Net Income Growth Rate	31.06%	4.91%	9.85%	46.83%	55.13%	28.18%	9.87%	19.75%	39.45%	474.5%	-274.4%	-72.44%
Stockholders Equity	589	1,098	1,234	1,033	842.9	613.5	476.9	392.9	308	212.8	147.6	119.6
Equity Growth Rate	24.5%	-10.98%	19.43%	22.57%	37.39%	28.63%	21.38%	27.58%	44.7%	44.18%	23.45%	11.15%
Return on Invested Capital (ROIC)	19.06%	21.02%	20.57%	26.73%	21.77%	16.74%	20.83%	19.5%	24.2%	36.91%	11.24%	-9.8%
After-tax Operating Income	101.1	238	223.4	194.1	137.6	91.86	71.98	63.55	52.13	36.75	6.65	-3.72
Income Tax Rate	-5%	29.6%	26.51%	25.36%	11.22%	-8.59%	-24.02%	3.97%	7.27%	-130.4%	8.83%	-4.82%
Invested Capital	473.5	1,132	1,086	726.3	632.1	548.7	345.6	325.9	215.4	99.56	59.17	37.97