Workday (WDAY) Outperforms Broader Market: What You Need to Know

Workday WDAY closed at $257.93 in the latest trading session, marking a +0.53% move from the prior day. The stock outperformed the S&P 500, which registered a daily gain of 0.12%. At the same time, the Dow added 0.34%, and the tech-heavy Nasdaq lost 0.07%.

The maker of human resources software's stock has climbed by 0.36% in the past month, falling short of the Computer and Technology sector's gain of 6.14% and the S&P 500's gain of 4.99%.

Market participants will be closely following the financial results of Workday in its upcoming release. The company plans to announce its earnings on May 23, 2024. The company is forecasted to report an EPS of $1.57, showcasing a 19.85% upward movement from the corresponding quarter of the prior year. Our most recent consensus estimate is calling for quarterly revenue of $1.97 billion, up 17.16% from the year-ago period.

For the entire fiscal year, the Zacks Consensus Estimates are projecting earnings of $6.59 per share and a revenue of $8.39 billion, representing changes of +12.84% and +15.59%, respectively, from the prior year.

It's also important for investors to be aware of any recent modifications to analyst estimates for Workday. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. To take advantage of this, we've established the Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational rating system.

The Zacks Rank system, stretching from #1 (Strong Buy) to #5 (Strong Sell), has a noteworthy track record of outperforming, validated by third-party audits, with stocks rated #1 producing an average annual return of +25% since the year 1988. Over the past month, the Zacks Consensus EPS estimate has remained steady. Workday currently has a Zacks Rank of #5 (Strong Sell).

In terms of valuation, Workday is presently being traded at a Forward P/E ratio of 38.94. Its industry sports an average Forward P/E of 30.86, so one might conclude that Workday is trading at a premium comparatively.

One should further note that WDAY currently holds a PEG ratio of 1.71. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The average PEG ratio for the Internet - Software industry stood at 1.71 at the close of the market yesterday.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 57, putting it in the top 23% 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.

Zacks Investment Research