Workday (WDAY) stock: strong growth, but is it overvalued?

1:23 pm ET, 04 Sep 2018

Workday, Inc. (WDAY) shares are trading at 155.73, down -0.32%.  The company is reporting its earnings on September 04 after market close.  What's driving WDAY stock price? What's WDAY stock price forecast, and what should investors be aware of?

Workday had a stellar stock performance in August. The company continues to grow in spite of competition from bigger ERP players such as SAP and Oracle. Earlier this year the company bought Adaptive Insights, a provider of cloud-based business planning and financial modeling tools for $1.55 billion.

The company has been focusing on mid-size and large corporations. Its revenue has been growing but the company is not profitable on a GAAP basis. Operating expenses notably product development which includes employee-related costs rose 34% to $263.5 million and marketing expenses rose 24% to $192.7 million in the previous quarter.

The company has a history of beating earnings estimates.

What is the sentiment towards the WDAY stock? Our technical analysis shows that: 

  • The stock short-term sentiment (next 30 days) is trending positive;
  • The mid-term sentiment (3-6 months) is trending positive;
  • The long-term sentiment (9-12 months) is trending positive.

Workday, Inc. (WDAY) forward P/E ratio is 82.77, and it’s high compared to its industry peers’ P/E ratios.

Workday, Inc. (WDAY) short share of float is 13%. The stock is much more frequently shorted than the average industry, sector or S&P 500 stock.

Workday, Inc. (WDAY) average analyst price target ($129.74) is -15.73% below its current price ($153.95).

For the latest price and information on Workday, Inc., please visit Finstead and search for "WDAY price" or "WDAY news".

Workday, Inc. (WDAY) Stock Guide

Updated at: 7:57 pm ET, 18 Sep 2020

Before we start: if you're looking for WDAY stock price, you can quickly find it out by visiting Finny and typing "WDAY quote". If you're looking for a quick scoop on WDAY stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "WDAY". You'll get all this info in one place. Or you can just type "WDAY news" to get the latest stock news.

Looking to buy or sell Workday, Inc. (WDAY)? Interested in getting the full scoop on WDAY, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this WDAY stock guide, we'll address key questions about WDAY, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analyst Predictions: stock forecast and analyst ratings;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are WDAY earnings?
2. What is WDAY stock forecast (i.e., prediction)?
3. WDAY buy or sell? What is WDAY Finny Score?
4. What are the reasons to buy WDAY? Why should I buy WDAY stock?
5. What are the reasons to sell WDAY? Why should I sell WDAY stock?
6. What are WDAY key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are WDAY earnings?

WDAY trailing 12-month earnings per share (EPS) is -$1.85.

Analyst Predictions

2. What is WDAY stock forecast (i.e., prediction)?

Based on WDAY analyst price targets, WDAY stock forecast is $240.38 (for a year from now). That means the average analyst price target for WDAY stock is $240.38. The prediction is based on 39 analyst estimates.

The low price target for WDAY is $133.00, while the high price target is $296.00.

WDAY analyst rating is Hold.

Analysis

3. WDAY buy or sell? What is WDAY Finny Score?

#{finnyScore:67}Our quantitative analysis shows 4 reasons to buy and 2 reasons to sell WDAY, resulting in Finny Score of 67.

4. What are the reasons to buy WDAY? Why should I buy WDAY stock?

Here are the reasons to buy WDAY stock:

  • It has good cash flows. The company has cash & cash equivalents of $1.6 billion as of October 31, 2018, with no debt.
  • Workday's revenue growth has been robust because of its strong performance in human capital management (HMC) and financial management segments. Software-as-Service (SAAS) market is expected to grow in double digits in the next five years.
  • As companies grow and want to reduce costs, Workday's all-in-one solutions for the human resources and finance departments have helped it win a lot of customers such as Walmart, Sanofi, Bank of America, Siemens, Shell and Netflix.
  • WDAY quarterly revenue growth was 19.60%, higher than the industry and sector average revenue growth (1.11% and 0.89%, respectively). See WDAY revenue growth chart.
  • WDAY profitability is improving. The YoY profit margin change was 11.03 percentage points. See WDAY profitability chart.
  • WDAY average analyst price target ($240.38) is above its current price ($200.45). See WDAY price target chart.
  • WDAY cash to debt ratio is 1.29, higher than the average industry (0.16) and sector (0.17) cash to debt ratio. See WDAY cash to debt chart.

5. What are the reasons to sell WDAY? Why should I sell WDAY stock?

Let's look at the reasons to sell WDAY stock (i.e., the bear case):

  • Workday is not making profits on a GAAP basis. The increasing operating expenses is another concern for investors.
  • Workday will face stiff competition as it tries to grow globally. Established ERP vendors such as SAP and Oracle have greater financial resources. The company's dominance could be challenged by the new entrants.
  • The stock has appreciated a lot lately, and its forward P/E ratio is still above 50. Workday is trading at 15 times its annual revenues.
  • WDAY short share of float is 5.09%. The stock is much more frequently shorted than the average industry, sector or S&P 500 stock. See WDAY short share of float chart.
  • WDAY short interest (days to cover the shorts) ratio is 6.19. The stock garners more short interest than the average industry, sector or S&P 500 stock. See WDAY short interest ratio chart.

Key Stats

6. What are WDAY key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for WDAY:

Metrics WDAY
Price $220.33
Average Price Target / Upside $240.38 / 9.10%
Average Analyst Rating Hold
Forward Dividend Yield 0.00%
Industry Software - Application
Sector Technology
Number of Employees 10,200
Market Cap $57.29B
Forward P/E Ratio 81.95
Price/Book Ratio 14.34
Revenue (TTM) $3.99B
YoY Quarterly Revenue Growth 19.60%
Profit Margin -10.77%

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