Financial Contrast: Unity Software (NYSE:U) vs. Paycom Software (NYSE:PAYC)

Unity Software (NYSE:U) and Paycom Software (NYSE:PAYC) are both computer and technology companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, valuation, analyst recommendations, risk, institutional ownership, earnings and profitability.

Insider and Institutional Ownership

73.5% of Unity Software shares are owned by institutional investors. Comparatively, 87.8% of Paycom Software shares are owned by institutional investors. 6.3% of Unity Software shares are owned by company insiders. Comparatively, 12.6% of Paycom Software shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Unity Software	-40.47%	-11.30%	-5.26%
Paycom Software	25.78%	32.90%	11.07%

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Unity Software	2	7	6	0	2.27
Paycom Software	0	11	1	0	2.08

Unity Software presently has a consensus price target of $22.21, suggesting a potential downside of 2.60%. Paycom Software has a consensus price target of $202.56, suggesting a potential downside of 3.43%. Given Unity Software’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Unity Software is more favorable than Paycom Software.

Valuation & Earnings

This table compares Unity Software and Paycom Software”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Unity Software	$1.97 billion	4.67	-$822.01 million	($2.04)	-11.18
Paycom Software	$1.82 billion	6.63	$340.79 million	$8.31	25.24

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

Volatility and Risk

Unity Software has a beta of 2.33, indicating that its stock price is 133% more volatile than the S&P 500. Comparatively, Paycom Software has a beta of 1.11, indicating that its stock price is 11% more volatile than the S&P 500.

Summary

Paycom Software beats Unity Software on 9 of the 14 factors compared between the two stocks.

About Unity Software

Unity Software Inc. operates a real-time 3D development platform. Its platform provides software solutions to create, run, and monetize interactive, real-time 2D and 3D content for mobile phones, tablets, PCs, consoles, and augmented and virtual reality devices. The company offers its solutions directly through its online store and field sales operations in North America, Denmark, Finland, the United Kingdom, Germany, Japan, China, Singapore, and South Korea, as well as indirectly through independent distributors and resellers worldwide. The company was founded in 2004 and is headquartered in San Francisco, 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.