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Workday (WDAY) Dips More Than Broader Markets: What You Should Know

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Workday (WDAY - Free Report) closed at $188.73 in the latest trading session, marking a -1.57% move from the prior day. This change lagged the S&P 500's daily loss of 1.11%. Meanwhile, the Dow lost 0.61%, and the Nasdaq, a tech-heavy index, lost 2.13%.

Prior to today's trading, shares of the maker of human resources software had gained 19.69% over the past month. This has outpaced the Computer and Technology sector's gain of 17.35% and the S&P 500's gain of 7% in that time.

Wall Street will be looking for positivity from Workday as it approaches its next earnings report date. The company is expected to report EPS of $0.89, up 14.1% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $1.63 billion, up 18.63% from the prior-year quarter.

Any recent changes to analyst estimates for Workday should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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.

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. Over the past month, the Zacks Consensus EPS estimate has moved 4.73% higher. Workday currently has a Zacks Rank of #3 (Hold).

Digging into valuation, Workday currently has a Forward P/E ratio of 41.36. Its industry sports an average Forward P/E of 42.94, so we one might conclude that Workday is trading at a discount comparatively.

It is also worth noting that WDAY currently has a PEG ratio of 1.86. 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 1.94 based on yesterday's closing prices.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 81, putting it in the top 33% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

To follow WDAY in the coming trading sessions, be sure to utilize Zacks.com.


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