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Workday (WDAY) Stock Sinks As Market Gains: What You Should Know

Zacks Equity Research

Workday (WDAY) closed at $187.15 in the latest trading session, marking a -0.1% move from the prior day. This change lagged the S&P 500's daily gain of 0.08%. At the same time, the Dow lost 0.09%, and the tech-heavy Nasdaq gained 0.38%.

Prior to today's trading, shares of the maker of human resources software had lost 14.36% over the past month. This has lagged the Computer and Technology sector's loss of 3.22% and the S&P 500's loss of 3.57% in that time.

WDAY will be looking to display strength as it nears its next earnings release, which is expected to be August 29, 2019. On that day, WDAY is projected to report earnings of $0.35 per share, which would represent year-over-year growth of 12.9%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $872.21 million, up 29.85% from the year-ago period.

WDAY's full-year Zacks Consensus Estimates are calling for earnings of $1.68 per share and revenue of $3.56 billion. These results would represent year-over-year changes of +23.53% and +26.29%, respectively.

It is also important to note the recent changes to analyst estimates for WDAY. These revisions help to show the ever-changing nature of near-term business trends. 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

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 sporting a Zacks Rank of #3 (Hold).

Digging into valuation, WDAY currently has a Forward P/E ratio of 111.48. This represents a premium compared to its industry's average Forward P/E of 55.53.

We can also see that WDAY currently has a PEG ratio of 4.12. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Internet - Software stocks are, on average, holding a PEG ratio of 2.83 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 77, which puts it in the top 31% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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