In the latest close session, Workday (WDAY) was down 4.02% at $199.55. This change lagged the S&P 500's daily loss of 0.19%. At the same time, the Dow lost 0.8%, and the tech-heavy Nasdaq lost 0.1%.
The maker of human resources software's stock has dropped by 3.25% in the past month, falling short of the Computer and Technology sector's gain of 2.62% and the S&P 500's gain of 2.26%.
Market participants will be closely following the financial results of Workday in its upcoming release. On that day, Workday is projected to report earnings of $2.3 per share, which would represent year-over-year growth of 19.79%. Our most recent consensus estimate is calling for quarterly revenue of $2.52 billion, up 14.11% from the year-ago period.
In terms of the entire fiscal year, the Zacks Consensus Estimates predict earnings of $9.07 per share and a revenue of $9.54 billion, indicating changes of +24.25% and +12.99%, respectively, from the former year.
It is also important to note the recent changes to analyst estimates for Workday. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the business and profitability.
Our research shows that these estimate changes are directly correlated with near-term stock prices. To capitalize on this, we've crafted the Zacks Rank, a unique model that incorporates these estimate changes and offers a practical rating system.
The Zacks Rank system, ranging from #1 (Strong Buy) to #5 (Strong Sell), possesses a remarkable history of outdoing, externally audited, with #1 stocks returning an average annual gain of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.43% higher. Workday is currently a Zacks Rank #3 (Hold).
Digging into valuation, Workday currently has a Forward P/E ratio of 22.93. For comparison, its industry has an average Forward P/E of 24.44, which means Workday is trading at a discount to the group.
One should further note that WDAY currently holds a PEG ratio of 1.06. 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. As of the close of trade yesterday, the Internet - Software industry held an average PEG ratio of 1.5.
The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 56, which puts it in the top 23% of all 250+ industries.
The Zacks Industry Rank is ordered from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
You can find more information on all of these metrics, and much more, on Zacks.com.
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Workday, Inc. (WDAY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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