Ceridian Earnings: Interest Income Upside and Shift to Higher Value Cloud Solutions Boosts Margins

Narrow-moat Ceridian reported a stellar start to fiscal 2023, with top-line growth broadly tracking our expectations but profitability surprising to the upside. Following the result, we have lifted our near-term assumptions, however, our longer-term forecasts and valuation remain intact. At current prices, Ceridian shares are trading an attractive 24% discount to our unchanged $83 fair value estimate. We believe the market is underappreciating the firm’s ability to displace incumbent providers and take further share, especially in international markets.