In the latest trading session, Workday (WDAY) closed at $185.46, marking a +1.48% move from the previous day. This change outpaced the S&P 500’s 0.3% gain on the day. Meanwhile, the Dow gained 0.14%, and the Nasdaq, a tech-heavy index, added 5.74%.
Coming into today, shares of the maker of human resources software had lost 5.81% in the past month. In that same time, the Computer and Technology sector gained 3.72%, while the S&P 500 gained 0.85%.
Workday will be looking to display strength as it nears its next earnings release, which is expected to be May 25, 2023. On that day, Workday is projected to report earnings of $1.10 per share, which would represent year-over-year growth of 32.53%. Meanwhile, our latest consensus estimate is calling for revenue of $1.67 billion, up 16.36% from the prior-year quarter.
For the full year, our Zacks Consensus Estimates are projecting earnings of $5.02 per share and revenue of $7.2 billion, which would represent changes of +37.91% and +15.82%, respectively, from the prior year.
It is also important to note the recent changes to analyst estimates for Workday. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company’s business outlook.
Our research shows that these estimate changes are directly correlated with near-term stock prices. 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.
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. Within the past 30 days, our consensus EPS projection has moved 2.91% higher. Workday is currently a Zacks Rank #2 (Buy).
Investors should also note Workday’s current valuation metrics, including its Forward P/E ratio of 36.43. This valuation marks a discount compared to its industry’s average Forward P/E of 39.64.
Also, we should mention that WDAY has a PEG ratio of 1.41. 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. WDAY’s industry had an average PEG ratio of 1.46 as of yesterday’s close.
The Internet – Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 111, putting it in the top 45% 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.
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