Workday (WDAY) closed the most recent trading day at $176.43, moving +1.75% from the previous trading session. The stock outpaced the S&P 500’s daily gain of 1.19%. Meanwhile, the Dow gained 0.76%, and the Nasdaq, a tech-heavy index, added 0.29%.
Coming into today, shares of the maker of human resources software had gained 5.32% in the past month. In that same time, the Computer and Technology sector gained 8.49%, while the S&P 500 gained 4.06%.
Investors will be hoping for strength from Workday as it approaches its next earnings release. The company is expected to report EPS of $0.89, up 14.1% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $1.63 billion, up 18.63% from the year-ago period.
For the full year, our Zacks Consensus Estimates are projecting earnings of $3.54 per share and revenue of $6.2 billion, which would represent changes of -11.28% and +20.68%, 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. As a result, we can interpret positive estimate revisions as a good sign for the company’s business outlook.
Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.
The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. Workday is holding a Zacks Rank of #2 (Buy) right now.
In terms of valuation, Workday is currently trading at a Forward P/E ratio of 49.05. Its industry sports an average Forward P/E of 41.02, so we one might conclude that Workday is trading at a premium comparatively.
We can also see that WDAY currently has a PEG ratio of 2.21. 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. WDAY’s industry had an average PEG ratio of 2.19 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 65, putting it in the top 26% of all 250+ industries.
The Zacks Industry Rank includes is listed in order 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.
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