Back to top

Image: Bigstock

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

Read MoreHide Full Article

Workday (WDAY - Free Report) closed at $161.14 in the latest trading session, marking a +0.59% move from the prior day. This change lagged the S&P 500's 2.28% gain on the day. Elsewhere, the Dow gained 2.13%, while the tech-heavy Nasdaq added 5.02%.

Heading into today, shares of the maker of human resources software had lost 5.4% over the past month, outpacing the Computer and Technology sector's loss of 8.41% and lagging the S&P 500's loss of 4.61% in that time.

Workday will be looking to display strength as it nears its next earnings release. On that day, Workday is projected to report earnings of $0.90 per share, which would represent year-over-year growth of 15.38%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.63 billion, up 18.63% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.54 per share and revenue of $6.2 billion, which would represent changes of -11.28% and +20.68%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for Workday. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 13.18% higher within the past month. Workday is currently sporting a Zacks Rank of #2 (Buy).

Valuation is also important, so investors should note that Workday has a Forward P/E ratio of 45.26 right now. Its industry sports an average Forward P/E of 40.15, so we one might conclude that Workday is trading at a premium comparatively.

Also, we should mention that WDAY has a PEG ratio of 2.04. 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. WDAY's industry had an average PEG ratio of 2 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 64, putting it in the top 26% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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

See More Zacks Research for These Tickers

Normally $25 each - click below to receive one report FREE:

Workday, Inc. (WDAY) - free report >>

Published in