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Workday (WDAY) Laps the Stock Market: Here's Why

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The latest trading session saw Workday (WDAY - Free Report) ending at $271.10, denoting a +0.93% adjustment from its last day's close. The stock's change was more than the S&P 500's daily gain of 0.15%. At the same time, the Dow lost 0.02%, and the tech-heavy Nasdaq gained 0.32%.

Coming into today, shares of the maker of human resources software had gained 0.71% in the past month. In that same time, the Computer and Technology sector gained 1.32%, while the S&P 500 gained 1.65%.

The investment community will be paying close attention to the earnings performance of Workday in its upcoming release. The company is predicted to post an EPS of $1.57, indicating a 19.85% growth compared to the equivalent quarter last year. Simultaneously, our latest consensus estimate expects the revenue to be $1.97 billion, showing a 17.08% escalation compared to the year-ago quarter.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $6.59 per share and revenue of $8.4 billion, indicating changes of +12.84% and +15.67%, respectively, compared to the previous year.

Investors should also pay attention to any latest changes in analyst estimates for Workday. Such recent modifications usually signify the changing landscape of near-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the company's business and profitability.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional 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. The Zacks Consensus EPS estimate has moved 0.84% lower within the past month. Workday is currently sporting a Zacks Rank of #3 (Hold).

Looking at its valuation, Workday is holding a Forward P/E ratio of 40.77. For comparison, its industry has an average Forward P/E of 28.72, which means Workday is trading at a premium to the group.

We can also see that WDAY currently has a PEG ratio of 1.79. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Internet - Software industry currently had an average PEG ratio of 1.86 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. With its current Zacks Industry Rank of 38, this industry ranks in the top 16% of all industries, numbering over 250.

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.

Don't forget to use Zacks.com to keep track of all these stock-moving metrics, and others, in the upcoming trading sessions.


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