What to Expect From Dayforce's Next Quarterly Earnings Report

Dayforce Inc. (DAY), based in Minneapolis, Minnesota, is a human capital management software company.  With a market cap of $11.1 billion, it offers various cloud-based human resources solutions, including payroll and tax, workforce management, and more. DAY is expected to announce its Q4 earnings before the market opens on Wednesday, Feb. 5.

Ahead of the event, analysts expect Dayforce to report a profit of $0.27 per share, down 29% from $0.38 per share reported in the year-ago quarter. The company has surpassed Wall Street’s earnings estimates in two of the past four quarters while missing on other two occasions.

However, its future prospects look appealing. For fiscal 2024, analysts expect the tech major to report an adjusted EPS of $1.06, up 63.1% from $0.65 in fiscal 2023. In fiscal 2025, its adjusted EPS is expected to grow 33% year-over-year to $1.41.

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DAY stock has surged 7.8% over the past year, underperforming the S&P 500 Index’s ($SPX) 22% gains and the Technology Select Sector SPDR Fund’s (XLK) 18.2% returns on a YTD basis.

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Despite strong product offerings, Dayforce has underperformed the broader market over the past year due to slower client growth, challenges in scaling its solutions, increased competition in the HR software market, and macroeconomic headwinds.

On Oct. 30, DAY shares popped more than 7% after reporting its Q3 results. The company reported adjusted EPS of $0.47, exceeding Wall Street’s forecast of $0.45. Its revenue reached $440 million, surpassing the expected $428.4 million. For Q4, Dayforce anticipates revenue between $452 million and $457 million, with full-year revenue projected to total $1.8 billion.

The consensus opinion on DAY stock is cautiously optimistic, with an overall “Moderate Buy” rating. Out of the 19 analysts covering the stock, nine recommend “Strong Buy,” one advises “Moderate Buy,” and nine suggest a “Hold” rating.

The mean price target of $84.29 represents a potential upside of 19.7% from current price levels.