Workday, Inc.’s (NASDAQ:WDAY) most recent earnings announcement in January 2019 suggested company earnings became less negative compared to the previous year’s level – great news for investors Below, I’ve laid out key growth figures on how market analysts view Workday’s earnings growth outlook over the next few years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Analysts’ expectations for next year seems pessimistic, with earnings becoming even more negative, reaching -US$498.9m in 2020. In addition, earnings are expected to fall off in the following year, before bouncing back up again to -US$539.4m in 2022.
Although it is helpful to be aware of the rate of growth year by year relative to today’s figure, it may be more valuable gauging the rate at which the earnings are growing on average every year. The benefit of this approach is that we can get a bigger picture of the direction of Workday’s earnings trajectory over the long run, irrespective of near term fluctuations, be more volatile. To calculate this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is -7.4%. This means, we can presume Workday will chip away at a rate of -7.4% every year for the next couple of years.
For Workday, I’ve compiled three pertinent factors you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is WDAY worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether WDAY is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of WDAY? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.