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Workday (WDAY) Gains But Lags Market: What You Should Know

Zacks Equity Research

Workday (WDAY) closed at $192.15 in the latest trading session, marking a +1.27% move from the prior day. This move lagged the S&P 500's daily gain of 1.5%. At the same time, the Dow added 1.48%, and the tech-heavy Nasdaq gained 1.95%.

Prior to today's trading, shares of the maker of human resources software had lost 12.96% over the past month. This has lagged the Computer and Technology sector's loss of 4.12% and the S&P 500's loss of 4.19% in that time.

Investors will be hoping for strength from WDAY as it approaches its next earnings release, which is expected to be August 29, 2019. In that report, analysts expect WDAY to post earnings of $0.35 per share. This would mark year-over-year growth of 12.9%. Meanwhile, our latest consensus estimate is calling for revenue of $872.21 million, up 29.85% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $1.68 per share and revenue of $3.56 billion. These totals would mark changes of +23.53% and +26.29%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for WDAY. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. WDAY is currently a Zacks Rank #3 (Hold).

Investors should also note WDAY's current valuation metrics, including its Forward P/E ratio of 112.92. This valuation marks a premium compared to its industry's average Forward P/E of 52.95.

Investors should also note that WDAY has a PEG ratio of 4.17 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Internet - Software stocks are, on average, holding a PEG ratio of 2.78 based on yesterday's closing prices.

The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 99, which puts it in the top 39% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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