DAY Jumped 31% In A Month. What To Do Now?
Dayforce (DAY) stock is up 30.7% in 21 trading days. Already own the stock? Might want to consider booking some profit as there is risk – specific to profitability and downturn resilience. Consider the following data:
- Size: A $11 Bil company with $1.9 Bil in revenue currently trading at $69.55.
- Fundamentals: Last 12 month revenue growth of 13.5% and operating margin of 6.6%.
- Liquidity: Has Debt to Equity ratio of 0.1 and Cash to Assets ratio of 0.1
- Valuation: Currently trading at P/E multiple of 227.0 and P/EBIT multiple of 103.2
- Has returned (median) 39.9% within a year following sharp dips since 2010. See DAY Dip Buy Analysis.
While we like to ride the momentum if the fundamentals check out – for DAY, see Buy or Sell DAY Stock – we are vary of bull traps. Specifically, it is worth trying to answer if things get really bad, and DAY drops 20-30% to $48.68 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience.
Below is a deep dive into Dayforce (DAY) downturn resilience – specifically, its performance vs the market during past crises? Turns out, the stock has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
Below are the details, but before that, as a quick background: DAY provides human capital management software solutions internationally, serving clients in the United States and Canada, with headquarters in Minneapolis, Minnesota.
2022 Inflation Shock
- DAY stock fell 66.2% from a high of $130.32 on 2 November 2021 to $44.05 on 16 June 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- The stock is yet to recover to its pre-Crisis high
- The highest the stock has reached since then is $81.80 on 25 November 2024 , and currently trades at $69.55
| DAY | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -66.2% | -25.4% |
| Time to Full Recovery | Not Fully Recovered days | 464 days |
2020 Covid Pandemic
- DAY stock fell 49.7% from a high of $77.89 on 4 February 2020 to $39.21 on 3 April 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 5 June 2020
| DAY | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -49.7% | -33.9% |
| Time to Full Recovery | 63 days | 148 days |
2018 Correction
- DAY stock fell 27.8% from a high of $44.29 on 3 October 2018 to $31.97 on 24 December 2018 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 6 February 2019
| DAY | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -27.8% | -19.8% |
| Time to Full Recovery | 44 days | 120 days |
Worried that DAY could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.