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Workday (WDAY) is a Solid Portfolio Pick Now: Here's Why
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Shares of Workday, Inc. (WDAY - Free Report) have climbed 43.8% over the past year, driven by improved market demand across its portfolio on the back of a flexible business model and solid cash flow. Earnings estimates for the current fiscal year have increased 21.1% since August 2022, implying robust inherent growth potential. With healthy fundamentals, this Zacks Rank #1 (Strong Buy) stock appears to be a solid investment option. You can see the complete list of today’s Zacks #1 Rank stocks here.
Image Source: Zacks Investment Research
Growth Drivers
Headquartered in Pleasanton, CA, Workday is a leading provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support. Apart from Financial Management and Human Capital Management (HCM) solutions, the company offers applications related to Payroll, Time Tracking, Recruiting, Learning, Planning, Professional Services Automation and Student.
Workday’s revenues continue to be aided by high demand for its HCM and financial management solutions. The company’s cloud-based business model and expanding product portfolio have been the primary growth drivers. Moreover, the growing clout of Workday Prism Analytics and Adaptive Insights business planning cloud offerings holds promise. Based on its expanding product portfolio, we believe that Workday has strong growth prospects.
Workday’s HCM suite of applications demonstrates solid growth momentum, driven by the transition of organizations to the cloud. A steady flow of customers portrays a high customer satisfaction rate, which bodes well for its long-term business model. Workday is also gaining traction in the international market, driven by higher digital transformation initiatives across Finance and HR domains, in tune with the evolving market conditions.
The company is expanding its portfolio beyond core HCM solutions into the financial domain. It is customizing them for diverse industries and verticals, such as education, the public and financial services, among others. This has helped it witness strong renewals and expand its customer base as business enterprises aim to consolidate spend and improve efficiency levels. This augurs well for the long-term growth of the company.
With solid demand trends, the company is confident about its growth opportunities in fiscal 2024. It plans to focus on higher investments in key industries and innovation efforts to expand its footprint within the partner ecosystem. For fiscal 2024, the company raised its guidance for subscription revenues to $6.570-$6.590 billion from the previously estimated range of $6.550-$6.575 billion, indicating growth of 18% year over year. Professional services revenues are expected in the range of $630-$650 million.
It has a long-term earnings growth expectation of 27.6% and delivered an earnings surprise of 15.4%, on average, in the trailing four quarters.
Other Key Picks
T-Mobile US, Inc. (TMUS - Free Report) , carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 8.8% in the last reported quarter. It has a VGM Score of B.
Headquartered in Bellevue, WA, T-Mobile is a national wireless service provider. The company offers services under the T-Mobile, Metro by T-Mobile and Sprint brands. T-Mobile, through its subsidiaries, provides wireless services for branded postpaid and prepaid, and wholesale customers.
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank #2, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 18.7% and delivered an earnings surprise of 12.8%, on average, in the trailing four quarters.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200- and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
AudioCodes Ltd. (AUDC - Free Report) is a Zacks Rank #2 stock. It has a long-term earnings growth expectation of 4.3% and delivered an earnings surprise of 2.2%, on average, in the trailing four quarters.
Headquartered in Lod, Israel, AudioCodes offers advanced communications software, products, and productivity solutions for the digital workplace. It provides a broad range of innovative products, solutions and services that are used by large multi-national enterprises and leading tier-1 operators around the world.
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Workday (WDAY) is a Solid Portfolio Pick Now: Here's Why
Shares of Workday, Inc. (WDAY - Free Report) have climbed 43.8% over the past year, driven by improved market demand across its portfolio on the back of a flexible business model and solid cash flow. Earnings estimates for the current fiscal year have increased 21.1% since August 2022, implying robust inherent growth potential. With healthy fundamentals, this Zacks Rank #1 (Strong Buy) stock appears to be a solid investment option. You can see the complete list of today’s Zacks #1 Rank stocks here.
Image Source: Zacks Investment Research
Growth Drivers
Headquartered in Pleasanton, CA, Workday is a leading provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support. Apart from Financial Management and Human Capital Management (HCM) solutions, the company offers applications related to Payroll, Time Tracking, Recruiting, Learning, Planning, Professional Services Automation and Student.
Workday’s revenues continue to be aided by high demand for its HCM and financial management solutions. The company’s cloud-based business model and expanding product portfolio have been the primary growth drivers. Moreover, the growing clout of Workday Prism Analytics and Adaptive Insights business planning cloud offerings holds promise. Based on its expanding product portfolio, we believe that Workday has strong growth prospects.
Workday’s HCM suite of applications demonstrates solid growth momentum, driven by the transition of organizations to the cloud. A steady flow of customers portrays a high customer satisfaction rate, which bodes well for its long-term business model. Workday is also gaining traction in the international market, driven by higher digital transformation initiatives across Finance and HR domains, in tune with the evolving market conditions.
The company is expanding its portfolio beyond core HCM solutions into the financial domain. It is customizing them for diverse industries and verticals, such as education, the public and financial services, among others. This has helped it witness strong renewals and expand its customer base as business enterprises aim to consolidate spend and improve efficiency levels. This augurs well for the long-term growth of the company.
With solid demand trends, the company is confident about its growth opportunities in fiscal 2024. It plans to focus on higher investments in key industries and innovation efforts to expand its footprint within the partner ecosystem. For fiscal 2024, the company raised its guidance for subscription revenues to $6.570-$6.590 billion from the previously estimated range of $6.550-$6.575 billion, indicating growth of 18% year over year. Professional services revenues are expected in the range of $630-$650 million.
It has a long-term earnings growth expectation of 27.6% and delivered an earnings surprise of 15.4%, on average, in the trailing four quarters.
Other Key Picks
T-Mobile US, Inc. (TMUS - Free Report) , carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 8.8% in the last reported quarter. It has a VGM Score of B.
Headquartered in Bellevue, WA, T-Mobile is a national wireless service provider. The company offers services under the T-Mobile, Metro by T-Mobile and Sprint brands. T-Mobile, through its subsidiaries, provides wireless services for branded postpaid and prepaid, and wholesale customers.
Arista Networks, Inc. (ANET - Free Report) , carrying a Zacks Rank #2, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has a long-term earnings growth expectation of 18.7% and delivered an earnings surprise of 12.8%, on average, in the trailing four quarters.
It holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed datacenter segment. Arista is increasingly gaining market traction in 200- and 400-gig high-performance switching products and remains well-positioned for healthy growth in data-driven cloud networking business with proactive platforms and predictive operations.
AudioCodes Ltd. (AUDC - Free Report) is a Zacks Rank #2 stock. It has a long-term earnings growth expectation of 4.3% and delivered an earnings surprise of 2.2%, on average, in the trailing four quarters.
Headquartered in Lod, Israel, AudioCodes offers advanced communications software, products, and productivity solutions for the digital workplace. It provides a broad range of innovative products, solutions and services that are used by large multi-national enterprises and leading tier-1 operators around the world.