10Y annualized return is
positive but below market average
at 6.2% per year
DAY has met or exceeded earnings expectations in
some
recent quarters (4/9)
High Gross Profit Margin
Operating Profit Margin
Strong Liquidity Ratios
Low Debt Levels
Strong Revenue Growth
High Customer Retention and Satisfaction
Product Innovation and Market Leadership
Projected Revenue Growth
Continued Investment in AI and Automation
Expansion of Professional Services Margins
Extremely High P/E Ratio
High Price-to-Sales Ratio
Low Return on Equity
Low Net Profit Margin
Interest Coverage Ratio Needs Attention
Employee Volume Fluctuations
Overall, Dayforce demonstrates strong business quality with high customer retention, substantial revenue growth, and a solid market position. Future prospects appear promising, driven by projected growth rates and ongoing innovations in AI and automation; however, employee volume fluctuations could pose challenges.
Analysis Date: February 5, 2025
Last Updated: March 11, 2025
Past performance does not guarantee future results. The data presented is indicative and may not be updated in real-time.
Dayforce Inc. is a company that creates software to help businesses manage their employees. They provide tools for handling things like hiring, paying workers, managing benefits, and tracking employee performance. Their main product, Dayforce, is a cloud-based platform, which means businesses can access it online. They also have a solution called Powerpay for smaller businesses to manage payroll easily.
Streams of revenue
Geographic Distribution
Estimations for reference only
Core Products
Business Type
Business to Business
Competitive Advantages
Key Business Risks
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$1.43
Current Market Price: $51.48
IV/P Ratio: 0.03x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
-3502.0000000000005%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for DAY
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (450.32)
P/B ratio ≤ 1.5 (3.20)
Current ratio ≥ 2.0 (3.38x)
Long-term debt < Net current assets (0.03x)
Margin of safety (-3502.0000000000005%)
DAY does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
0.72%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-30)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
47.68%
Higher values indicate better efficiency in production
TTM (as of 2025-04-30)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
1.03%
Higher values indicate better overall profitability
TTM (as of 2025-04-30)
The operating profit margin of 6.51% indicates that the company is able to generate a reasonable level of profit from its operations.
The return on equity (ROE) is only 0.72%, which is quite low and suggests that the company is not generating a strong return on shareholders' investments.
The net profit margin of 1.03% is quite low, indicating that the company is retaining a minimal amount of profit after all expenses, which could be a concern for investors.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.01x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
3.38x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
The current ratio of 3.38 and quick ratio of 3.38 suggest that the company has a strong ability to meet its short-term obligations without selling inventory.
With a debt-to-equity ratio of 0.009 and debt-to-assets ratio of 0.003, the company is conservatively financed, indicating strong financial health and low risk from debt.
The interest coverage ratio of 2.82 indicates that while the company can cover its interest expenses, it's not excessively comfortable, which could be a concern if earnings fluctuate.
Meeting Expectations
Higher values indicate better execution and credibility
Recent Results
EPS
Dayforce reported total revenue of $1.76 billion for 2024, achieving a 17% growth on a constant currency basis. The recurring revenue excluding float grew 21%, indicating solid demand for its core services.
The gross retention rate improved to 98%, demonstrating strong customer satisfaction and loyalty. This is supported by the company’s ability to innovate and adapt its offerings to meet customer needs.
Dayforce continues to lead in innovation with extensive compliance updates and recognition from Gartner as a leader in Cloud HCM solutions. This positions the company favorably against competitors.
For 2025, Dayforce anticipates total revenue growth of 14% to 15%, with recurring revenue excluding float expected to grow between 15% and 17%. This reflects confidence in sustained demand.
The company is focusing on further innovations in AI, with planned releases of AI agents and enhancements to existing products, which can drive future sales and operational efficiencies.
With expectations for professional services to break even in 2025, Dayforce is improving its operational efficiency through partnerships with system integrators, indicating a well-managed growth strategy.
Dayforce experienced lower-than-expected employee volumes in Q4, which slightly impacted recurring revenue. This variability raises concerns about the predictability of revenue streams.