Dayforce IncDAYNYSE

Overview Intelligence Charts News Fundamentals Key Metrics Financials Growth Insiders

DCF Valuation

DCF Valuation Summary

Sell

Fair Value: $60.54 per share(market-calibrated)

-13.3%

Upside to Fair Value

Current

$69.86

Pure Model

$59.18

Fair Value

$60.54

Bull Case

$83.83

Bear Case

$39.88

Market Reality Check

Model Terminal Growth

3.75%

Market-Implied Growth

6.39%

Calibrated Growth

4.15%

Fair value uses 85% model / 15% market-implied terminal growth. Pure model: $59.18.

What's Driving This Ratingfor DAY

✓

CapEx already efficient

CapEx at 5.02% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

↑

Margin expansion modeled

Current EBIT margin is 1.14% — below the sector mature average of 25.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $776M (18.75% margin).

⚠

Analyst growth decelerates sharply

Revenue growth drops from 23.18% in Year 1 to 3.75% by Year 5 (per analyst consensus). This growth deceleration is a key reason the model may undervalue the stock if growth re-accelerates.

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $35.88/share (19.9x terminal FCF) while exit multiple gives $82.48/share (49.3x terminal FCF). The 28x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 3.75% growth is more conservative. The base case averages both methods.

🎯

Market pricing in higher long-term growth

To justify $69.86, the market implies 6.39% perpetual growth — 264bps above the model's 3.75%. This suggests the market sees additional growth catalysts (AI, new products, market expansion) not captured in analyst estimates.

→

Moderate cash flow conversion

Year 10 FCF/EBITDA conversion is 56.81% — acceptable but leaves room for improvement. High reinvestment needs consume a meaningful portion of operating cash flow.

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.17

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)9.75%

Cost of Debt

Pre-tax Cost of Debt2.70%

Tax Rate30.00%

After-tax Cost of Debt1.89%

Equity Weight (E/V)89.94%

Debt Weight (D/V)10.06%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (89.94% × 9.75%) + (10.06% × 1.89%)

= 8.96%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$2.2B	$2.9B	$3.4B	$3.7B	$4.1B
EBIT	$25M	$33M	$204M	$474M	$776M
Tax	$7M	$10M	$61M	$142M	$233M
NOPAT	$17M	$23M	$143M	$332M	$543M
+ Depreciation	$138M	$183M	$219M	$236M	$264M
- Capex	$109M	$145M	$173M	$186M	$208M
- Δ NWC	$23M	$25M	$7M	$7M	$8M
Free Cash Flow	$24M	$37M	$182M	$374M	$591M
Discount Factor	0.918	0.773	0.651	0.548	0.424
Present Value	$22M	$28M	$119M	$205M	$250M

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$591M

Terminal Growth Rate3.75%

WACC8.96%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$11.8B

PV of Terminal Value$5.0B

Exit Multiple Method

Year 10 EBITDA$1.0B

Exit Multiple (EV/EBITDA)28.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$29.1B

PV of Terminal Value$12.3B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$1.3B

PV of Terminal Value$5.0B

Enterprise Value$6.3B

(-) Net Debt$653M

Equity Value$5.7B

Shares Outstanding158M

Price per Share$35.88

Exit Multiple Method

PV of Projected FCFs$1.3B

PV of Terminal Value$12.3B

Enterprise Value$13.7B

(-) Net Debt$653M

Equity Value$13.0B

Shares Outstanding158M

Price per Share$82.48

Pure Model Fair Value

$59.18

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	2.75%	3.25%	3.75%	4.25%	4.75%
6.96%	$75.89	$79.16	$83.44	$89.31	$97.83
7.96%	$64.91	$66.83	$69.19	$72.20	$76.14
8.96%	$56.51	$57.73	$59.18	$60.94	$63.12
9.96%	$49.74	$50.56	$51.52	$52.64	$53.98
10.96%	$44.10	$44.68	$45.34	$46.10	$46.98

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$39.88

-42.9% vs current

• -25% vs analyst consensus
• Terminal growth: 3.3%
• Beta: 1.46

Base Case

$59.18

-15.3% vs current

• Analyst consensus
• Terminal growth: 3.8%
• Beta: 1.17

Bull Case

$83.83

20.0% vs current

• +25% vs analyst consensus
• Terminal growth: 4.3%
• Beta: 0.99

Key Assumptions & Drivers• Technology Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth23.18%

Year 3 Revenue Growth18.60%

Year 5 Revenue Growth3.75%

Year 7 Revenue Growth3.75%

Year 10 Revenue Growth3.75%

Terminal Growth Rate3.75%

Margin & Efficiency

Current EBIT Margin1.14%

Terminal EBIT Margin25.00%

Tax Rate30.00%

Historical Capex / Rev5.02%

NWC / Revenue5.55%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 28x EV/EBITDA (Technology sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

Explore More

S&P 500 Screener

Filter and sort all 500 stocks

Market Movers

Today's biggest gainers and losers

Market Heatmap

Visual sector performance