Dayforce Inc.'s (NYSE:DAY) Stock Is Rallying But Financials Look Ambiguous: Will The Momentum Continue?

Simply Wall St.10-17

Most readers would already be aware that Dayforce's (NYSE:DAY) stock increased significantly by 15% over the past three months. But the company's key financial indicators appear to be differing ...

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But the company's key financial indicators appear to be differing ...</p>\n\n<a href=\"https://simplywall.st/stocks/us/commercial-services/nyse-day/dayforce/news/dayforce-incs-nyseday-stock-is-rallying-but-financials-look\">Source Link</a>\n\n</div>\n","source":"simplywall_highlight","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Dayforce Inc.'s (NYSE:DAY) Stock Is Rallying But Financials Look Ambiguous: Will The Momentum Continue?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nDayforce Inc.'s (NYSE:DAY) Stock Is Rallying But Financials Look Ambiguous: Will The Momentum Continue?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-10-17 02:15 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://simplywall.st/stocks/us/commercial-services/nyse-day/dayforce/news/dayforce-incs-nyseday-stock-is-rallying-but-financials-look><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Most readers would already be aware that Dayforce's (NYSE:DAY) stock increased significantly by 15% over the past three months.   But the company's key financial indicators appear to be differing ...</p>\n\n<a href=\"https://simplywall.st/stocks/us/commercial-services/nyse-day/dayforce/news/dayforce-incs-nyseday-stock-is-rallying-but-financials-look\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU2517655374.HKD","symbol_name":"WELLINGTON NEXT GENERATION EDUCATION \"A\" (HKD) ACC","start_time":0,"source_url":"https://simplywall.st/stocks/us/commercial-services/nyse-day/dayforce/news/dayforce-incs-nyseday-stock-is-rallying-but-financials-look","article_id":"2476922129","we_media_id":null,"thumbnails":["https://images.simplywall.st/asset/industry/8041000-choice2-main-header/1585186556238"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2476922129","pubTimestamp":1729102540,"sourceInfo":{"source_id":"simplywall_highlight","name":"Simply Wall St."},"weMediaInfo":null,"summary":"Most readers would already be aware that Dayforce's (NYSE:DAY) stock increased significantly by 15% over the past three...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU2517655374.HKD":"WELLINGTON NEXT GENERATION EDUCATION \"A\" (HKD) ACC","BK4585":"ETF&股票定投概念","BK4588":"碎股","LU2517655028.SGD":"WELLINGTON NEXT GENERATION EDUCATION \"A\" (SGDHDG) ACC","BK4130":"人力资源与就业服务","DAY":"Dayforce","LU2517655291.USD":"WELLINGTON NEXT GENERATION EDUCATION \"A\" (USD) ACC","NYSE":"纽交所"},"translate_title":"Dayforce Inc.（纽约证券交易所股票代码：DAY）的股价正在上涨，但财务状况看起来很模糊：这种势头会持续吗？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"DAY":1,"NYSE":1},"content_text":"Most readers would already be aware that Dayforce's (NYSE:DAY) stock increased significantly by 15% over the past three months.   But the company's key financial indicators appear to be differing across the board and that makes us question whether or not the company's current share price momentum can be maintained.      Particularly, we will be paying attention to Dayforce's  ROE today.    Return on equity or ROE is a key measure used to assess how efficiently a company's management is utilizing the company's capital.  Simply put, it is used to assess the profitability of a company in relation to its equity capital.  See our latest analysis for Dayforce  How To Calculate Return On Equity?  Return on equity can be calculated by using the formula:  Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for Dayforce is:1.9% = US$47m ÷ US$2.5b (Based on the trailing twelve months to June 2024). The 'return' is the profit over the last twelve months.  So, this means that for every $1 of its shareholder's investments, the company generates a profit of $0.02.   What Is The Relationship Between ROE And Earnings Growth?  So far, we've learned that ROE is a measure of a company's profitability.  Depending on how much of these profits the company reinvests or \"retains\", and how effectively it does so, we are then able to assess a company’s earnings growth potential.  Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics.  Dayforce's Earnings Growth And 1.9% ROE  As you can see, Dayforce's ROE looks pretty weak.   Even when compared to the industry average of 16%, the ROE figure is pretty disappointing.   Given the circumstances, the significant decline in net income by 20% seen by Dayforce over the last five years is not surprising.  We reckon that there could also be other factors at play here.  For example, the business has allocated capital poorly, or that the company has a very high payout ratio.     That being said, we compared Dayforce's performance with the industry and were concerned when we found that while the company has shrunk its earnings, the industry has grown its earnings at a rate of 9.9% in the same 5-year period.   NYSE:DAY Past Earnings Growth October 16th 2024 The basis for attaching value to a company is, to a great extent, tied to its earnings growth.  The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in.  Doing so will help them establish if the stock's future looks promising or ominous.    One good indicator of expected earnings growth is the P/E ratio which determines the price the market is willing to pay for a stock based on its earnings prospects. So, you may want to check if Dayforce is trading on a high P/E or a low P/E, relative to its industry.    Is Dayforce Efficiently Re-investing Its Profits?   Because Dayforce doesn't pay any regular dividends, we infer that it is retaining all of its profits, which is rather perplexing when you consider the fact that there is no earnings growth to show for it.  So there might be other factors at play here which could potentially be hampering growth. For example, the business has faced some headwinds.     Conclusion    On the whole, we feel that the performance shown by Dayforce can be open to many interpretations.      While the company does have a high rate of reinvestment, the low ROE means that all that reinvestment is not reaping any benefit to its investors, and moreover, its having a negative impact on the earnings growth.       With that said, we studied the latest analyst forecasts and found that while the company has shrunk its earnings in the past, analysts expect its earnings to grow in the future.     To know more about the company's future earnings growth forecasts take a look at this free report on analyst forecasts for the company to find out more. New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. 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