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CDAY

Ceridian HCM Holding NYSE:CDAY Stock Report

Last Price

US$47.60

Market Cap

US$7.3b

7D

-7.7%

1Y

-51.4%

Updated

01 Jul, 2022

Data

Company Financials +
CDAY fundamental analysis
Snowflake Score
Valuation1/6
Future Growth4/6
Past Performance0/6
Financial Health4/6
Dividends0/6

CDAY Stock Overview

Ceridian HCM Holding Inc., together with its subsidiaries, operates as a human capital management (HCM) software company in the United States, Canada, and internationally.

Ceridian HCM Holding Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Ceridian HCM Holding
Historical stock prices
Current Share PriceUS$47.60
52 Week HighUS$130.37
52 Week LowUS$43.23
Beta1.5
1 Month Change-11.51%
3 Month Change-31.03%
1 Year Change-51.37%
3 Year Change-8.21%
5 Year Changen/a
Change since IPO52.52%

Recent News & Updates

Jul 02

Ceridian: Slightly More Positive Story, But Not Yet A Buy

Ceridian shares have fallen 55% year to date, collapsing the valuation of what was previously a very overvalued enterprise software stock. Ceridian's HCM platform has seen improved growth thanks to normalizing employment levels. Float revenue should also benefit from higher interest rates. At the same time, Ceridian's Dayforce platform lags in comparison to bigger brands like Workday. Still trading at ~6x forward revenue, Ceridian is not yet a screaming buy. The markets still can't seem to decide on a direction: year-end rally or recession slump. In spite of continued volatility, I continue to encourage investors to prepare for a rebound by investing into undervalued, beaten-down growth software stocks. On paper, Ceridian (CDAY) looks like an appealing play. This HCM software stock has lost 55% of its value year to date: but that correction is largely a reflection of the fact that the stock was massively overvalued to begin with. Though the combination of Ceridian's slightly improved fundamental results and valuation slide have made the stock slightly less unappealing, it's still far from my ideal rebound play. In early May, Ceridian released relatively strong Q1 results, which we'll discuss in more detail in the next section. The company is benefiting/continues to expect benefit from two primary factors: one, a recovery in employment levels which helps its products that are seat-based; and two, rising interest rates which helps Ceridian's interest income on float balances it holds on behalf of its clients. Since that earnings release, however, Ceridian has still fallen ~15% in sympathy with other software names. I remain neutral on Ceridian, and I don't think this is a "buy the dip situation." Some of my existing concerns on Ceridian remain very relevant: Weak profile vis-a-vis cloud competitors. HCM is a very crowded space, dominated by the likes of Workday and Oracle (ORCL), and Dayforce is barely a distant laggard. Margin lags cloud peers. While Ceridian's cloud revenue carries a low-70s gross margin like peers, the weighting of Ceridian's revenue toward float and other lower-margin services puts Ceridian's overall GAAP gross margin at just 54% in its most recent quarter, below most SaaS peers and justifying a significant discount in its valuation multiple. Confusing leadership structure, with Ceridian just having elevated its COO to co-CEO status, while still reporting to the original CEO (seems like a catalyst for boosted compensation to me). Recent examples like Salesforce (CRM) indicate a dual-CEO structure doesn't often last or work out well. To me, Ceridian's valuation remains prohibitively expensive to merit an investment. At current share prices near $47, Ceridian trades at a market cap of $7.23 billion. After we net off the $354.8 million of cash and $1.22 billion of debt on the company's most recent balance sheet, the company's resulting enterprise value is $8.10 billion. Meanwhile, for the current fiscal year, the company has guided to $1.208-$1.230 billion of revenue, or 18-20% y/y growth; and $190-$205 million of Adjusted EBITDA, or a 16-17% adjusted EBITDA margin. Ceridian guidance (Ceridian Q1 shareholder letter) Against the midpoint of this outlook, Ceridian trades at: 6.6x EV/FY22 revenue 41.1x EV/FY22 Adjusted EBITDA In other words, for a company of what I consider to be questionable fundamental quality, Ceridian is quite overvalued. I'd wait for Ceridian to trade at a mid-teens Adjusted EBITDA multiple (either through continued share price compression or adjusted EBITDA expansion) until I can seriously consider a bullish position in this name. The bottom line here: Ceridian continues to lack a "wow" factor, either in its results or in its price. There are far better software stocks to invest in to position yourself for a rebound (top picks at the moment include Sumo Logic (SUMO), Asana (ASAN), Coupa (COUP), and Palantir (PLTR)). Q1 download Let's now go through Ceridian's latest Q1 results in greater detail. The Q1 earnings summary is shown below: Ceridian Q1 results (Ceridian Q1 shareholder letter) Ceridian's revenue in Q1 grew 25% y/y to $293.3 million, beating Wall Street's expectations of $289.4 million (+23% y/y) by a two-point margin. This growth rate comes well ahead of the company's full-year growth expectations of 18-20% y/y, though it did decelerate two points versus 27% y/y growth in Q4. Several macro factors are responsible for helping Ceridian's results in the quarter. First, relative to early 2021, more of Ceridian's clients are staffed at fuller levels (especially given late-2021 hiring sprees to accommodate a post-COVID economic resurgence), which helps a company whose products are primarily priced on a per-seat basis. Second, greater float balances (up 18% y/y) helped to offset a slight 11bps decline in float yields. Moving into Q2, however, with rising interest rates, Ceridian is expecting float revenue growth to accelerate to 25% y/y, versus just 9% y/y growth in Q1.

Shareholder Returns

CDAYUS SoftwareUS Market
7D-7.7%-4.7%-2.5%
1Y-51.4%-23.7%-21.2%

Return vs Industry: CDAY underperformed the US Software industry which returned -23.6% over the past year.

Return vs Market: CDAY underperformed the US Market which returned -21.7% over the past year.

Price Volatility

Is CDAY's price volatile compared to industry and market?
CDAY volatility
CDAY Average Weekly Movement8.7%
Software Industry Average Movement11.0%
Market Average Movement8.1%
10% most volatile stocks in US Market16.9%
10% least volatile stocks in US Market3.2%

Stable Share Price: CDAY is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 9% a week.

Volatility Over Time: CDAY's weekly volatility (9%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
20137,462David Ossiphttps://www.ceridian.com

Ceridian HCM Holding Inc., together with its subsidiaries, operates as a human capital management (HCM) software company in the United States, Canada, and internationally. It offers Dayforce, a cloud HCM platform that provides human resources (HR), payroll, benefits, workforce management, and talent management functionality; and Powerpay, a cloud HR and payroll solution for the small business market. The company also provides Bureau solutions for payroll and payroll-related services.

Ceridian HCM Holding Fundamentals Summary

How do Ceridian HCM Holding's earnings and revenue compare to its market cap?
CDAY fundamental statistics
Market CapUS$7.27b
Earnings (TTM)-US$83.60m
Revenue (TTM)US$1.08b

6.7x

P/S Ratio

-86.9x

P/E Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
CDAY income statement (TTM)
RevenueUS$1.08b
Cost of RevenueUS$621.50m
Gross ProfitUS$461.50m
Other ExpensesUS$545.10m
Earnings-US$83.60m

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)-0.55
Gross Margin42.61%
Net Profit Margin-7.72%
Debt/Equity Ratio56.7%

How did CDAY perform over the long term?

See historical performance and comparison
We’ve recently updated our valuation analysis.

Valuation

Is CDAY undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

1/6

Valuation Score 1/6

  • Price-To-Sales vs Peers

  • Price-To-Sales vs Industry

  • Price-To-Sales vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for CDAY?

Other financial metrics that can be useful for relative valuation.

CDAY key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue7.6x
Enterprise Value/EBITDA1062x
PEG Ration/a

Price to Sales Ratio vs Peers

How does CDAY's PS Ratio compare to its peers?

CDAY PS Ratio vs Peers
The above table shows the PS ratio for CDAY vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPSEstimated GrowthMarket Cap
Peer Average6.8x
DBX Dropbox
3.7x6.9%US$8.2b
MANH Manhattan Associates
10.8x10.3%US$7.4b
BKI Black Knight
6.8x6.7%US$10.2b
XM Qualtrics International
6.1x18.2%US$7.1b
CDAY Ceridian HCM Holding
6.7x15.1%US$7.3b

Price-To-Sales vs Peers: CDAY is good value based on its Price-To-Sales Ratio (6.7x) compared to the peer average (6.8x).


Price to Earnings Ratio vs Industry

How does CDAY's PE Ratio compare vs other companies in the US Software Industry?

Price-To-Sales vs Industry: CDAY is expensive based on its Price-To-Sales Ratio (6.7x) compared to the US Software industry average (4.4x)


Price to Sales Ratio vs Fair Ratio

What is CDAY's PS Ratio compared to its Fair PS Ratio? This is the expected PS Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

CDAY PS Ratio vs Fair Ratio.
Fair Ratio
Current PS Ratio6.7x
Fair PS Ratio4.6x

Price-To-Sales vs Fair Ratio: CDAY is expensive based on its Price-To-Sales Ratio (6.7x) compared to the estimated Fair Price-To-Sales Ratio (4.6x).


Share Price vs Fair Value

What is the Fair Price of CDAY when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: CDAY ($47.6) is trading above our estimate of fair value ($13.84)

Significantly Below Fair Value: CDAY is trading above our estimate of fair value.


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate CDAY's PEG Ratio to determine if it is good value.


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Future Growth

How is Ceridian HCM Holding forecast to perform in the next 1 to 3 years based on estimates from 15 analysts?

Future Growth Score

4/6

Future Growth Score 4/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


68.4%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CDAY is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (1.9%).

Earnings vs Market: CDAY is forecast to become profitable over the next 3 years, which is considered above average market growth.

High Growth Earnings: CDAY is expected to become profitable in the next 3 years.

Revenue vs Market: CDAY's revenue (15.1% per year) is forecast to grow faster than the US market (8.2% per year).

High Growth Revenue: CDAY's revenue (15.1% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: CDAY's Return on Equity is forecast to be low in 3 years time (2.1%).


Discover growth companies

Past Performance

How has Ceridian HCM Holding performed over the past 5 years?

Past Performance Score

0/6

Past Performance Score 0/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


-11.2%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: CDAY is currently unprofitable.

Growing Profit Margin: CDAY is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: CDAY is unprofitable, and losses have increased over the past 5 years at a rate of 11.2% per year.

Accelerating Growth: Unable to compare CDAY's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: CDAY is unprofitable, making it difficult to compare its past year earnings growth to the Software industry (26.8%).


Return on Equity

High ROE: CDAY has a negative Return on Equity (-3.91%), as it is currently unprofitable.


Discover strong past performing companies

Financial Health

How is Ceridian HCM Holding's financial position?

Financial Health Score

4/6

Financial Health Score 4/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Stable Cash Runway

  • Forecast Cash Runway

Financial Position Analysis

Short Term Liabilities: CDAY's short term assets ($8.0B) exceed its short term liabilities ($7.6B).

Long Term Liabilities: CDAY's short term assets ($8.0B) exceed its long term liabilities ($1.3B).


Debt to Equity History and Analysis

Debt Level: CDAY's net debt to equity ratio (40.2%) is considered high.

Reducing Debt: CDAY's debt to equity ratio has reduced from 109.4% to 56.7% over the past 5 years.


Balance Sheet


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: CDAY has sufficient cash runway for more than 3 years based on its current free cash flow.

Forecast Cash Runway: Insufficient data to determine if CDAY has enough cash runway if its free cash flow continues to grow or shrink based on historical rates.


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Dividend

What is Ceridian HCM Holding current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Future Dividend Coverage

Dividend Yield vs Market

Notable Dividend: Unable to evaluate CDAY's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate CDAY's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if CDAY's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if CDAY's dividend payments have been increasing.


Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as CDAY has not reported any payouts.


Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

1.2yrs

Average management tenure


CEO

David Ossip (55 yo)

0.33

Tenure

US$10,626,701

Compensation

Mr. David D. Ossip serves as an Independent Director at Dragoneer Growth Opportunities Corp. II. He has been an Independent Director of Dragoneer Growth Opportunities Corp. III since March 22, 2021. He ser...


CEO Compensation Analysis

Compensation vs Market: David's total compensation ($USD10.63M) is about average for companies of similar size in the US market ($USD8.30M).

Compensation vs Earnings: David's compensation has been consistent with company performance over the past year.


Leadership Team

Experienced Management: CDAY's management team is not considered experienced ( 1.2 years average tenure), which suggests a new team.


Board Members

Experienced Board: CDAY's board of directors are considered experienced (4 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: CDAY insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 2.3%.


Top Shareholders

Company Information

Ceridian HCM Holding Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: Ceridian HCM Holding Inc.
  • Ticker: CDAY
  • Exchange: NYSE
  • Founded: 2013
  • Industry: Application Software
  • Sector: Software
  • Implied Market Cap: US$7.266b
  • Shares outstanding: 152.64m
  • Website: https://www.ceridian.com

Number of Employees


Location

  • Ceridian HCM Holding Inc.
  • 3311 East Old Shakopee Road
  • Minneapolis
  • Minnesota
  • 55425-1640
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/07/01 00:00
End of Day Share Price2022/07/01 00:00
Earnings2022/03/31
Annual Earnings2021/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.