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Ceridian HCM Holding Inc CDAY

Rating as of

Morningstar’s Analysis

Valuation
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Reinitiating Coverage of Ceridian HCM With Narrow Moat, Stable Trend Rating and $80 FVE

Emma Williams Equity Analyst

Analyst Note

| Emma Williams |

We are reinitiating coverage of Ceridian HCM with an $80 fair value estimate and narrow moat, stable moat trend, and high uncertainty ratings. Ceridian offers payroll and human capital management solutions via its flagship Dayforce platform, secondary platform Powerpay targeting small businesses in Canada, and remaining legacy Bureau products such as tax services. The company benefits from high customer switching costs, allowing it to retain clients, upsell add-on modules, and earn a steady stream of recurring revenue at a low marginal cost, underpinning our narrow moat rating. We expect Ceridian’s growing record of performance should help to attract new business, increase market share, and expand into new global markets. The shares currently screen as overvalued, trading at a 30% premium to our fair value estimate.

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Company Profile

Business Description

Ceridian HCM provides payroll and human capital management solutions targeting clients with 100-100,000 employees. Following the 2012 acquisition of Dayforce, Ceridian pivoted away from its legacy on-premises Bureau business to become a cloud HCM provider. As of fiscal 2020, nearly 80% of group revenue was derived from the flagship Dayforce platform geared toward enterprise clients. The remaining revenue is about evenly split between cloud platform Powerpay, targeting small businesses in Canada, and legacy Bureau products.

Contact
3311 East Old Shakopee Road
Minneapolis, MN, 55425
T +1 952 853-8100
Sector Technology
Industry Software - Application
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Classic Growth
Employees 5,974