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Workday Inc Class A WDAY

Morningstar Rating
$295.16 +0.11 (0.04%)
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Company Report

Workday Earnings: Solid Close to the Year, With Strong Execution in AI and Margin Expansion

Wide-moat Workday posted solid fourth-quarter results that were above our expectations for revenue and adjusted earnings per share. The acceleration of artificial intelligence demand and use cases has put Workday in a strong position to capitalize on its existing AI integrations, with particular interest in talent acquisition. Furthering the firm’s AI strategy is its announced acquisition of HiredScore, a provider of AI-powered talent orchestration solutions. We think this acquisition makes sense based on Workday’s existing AI prowess and should not pose a material integration risk. Management reiterated its fiscal 2025 outlook, which includes stable macroeconomic conditions throughout the year. We see slower-than-expected backlog growth as somewhat cautionary within results but believe this is transitory. We raise our fair value estimate to $285 per share from $245 to account for slightly higher margin assumptions based on continued strong execution. We see shares as fairly valued.

Price vs Fair Value

WDAY is trading at a 4% premium.
Price
$295.07
Fair Value
$698.00
Uncertainty
High
1-Star Price
$248.37
5-Star Price
$654.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Workday’s planning and analytics solutions should take off after COVID-19 has enterprises placing more importance on top-down planning. This should drive further customer and ACV growth, and thus revenue growth.

Bears

Workday’s FINS platform may not be able to increase its attach rate, moderating forecast ACV and thus revenue.

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News

Trading Information

Previous Close Price
$295.05
Day Range
$289.79295.92
52-Week Range
$174.06311.28
Bid/Ask
$293.05 / $295.00
Market Cap
$77.63 Bil
Volume/Avg
2.1 Mil / 1.9 Mil

Key Statistics

Price/Earnings (Normalized)
56.10
Price/Sales
10.78
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield
0.55%

Company Profile

Workday is a software company that offers human capital management, or HCM, financial management, and business planning solutions. Known for being a cloud-only software provider, Workday is headquartered in Pleasanton, California. Founded in 2005, Workday now employs over 18,000 employees.
Sector
Technology
Industry
Software - Application
Stock Style Box
Large Growth
Total Number of Employees
17,700

Competitors

Valuation

Metric
WDAY
SAP
ORCL
Price/Earnings (Normalized)
56.1038.7820.60
Price/Book Value
9.604.5879.41
Price/Sales
10.786.526.06
Price/Cash Flow
35.8633.1217.00
Price/Earnings
WDAY
SAP
ORCL

Financial Strength

Metric
WDAY
SAP
ORCL
Quick Ratio
2.011.380.63
Current Ratio
2.131.550.79
Interest Coverage
−0.062.253.75
Quick Ratio
WDAY
SAP
ORCL

Profitability

Metric
WDAY
SAP
ORCL
Return on Assets (Normalized)
10.36%7.42%11.39%
Return on Equity (Normalized)
23.20%12.88%11,805.30%
Return on Invested Capital (Normalized)
13.74%11.28%20.08%
Return on Assets
WDAY
SAP
ORCL
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