Stock (Symbol) |
Workday (WDAY) |
Stock Price |
$92 |
Sector |
| Technology |
Data is as of |
| May 7, 2017 |
Expected to Report |
| May 30 |
Company Description |
 Workday, Inc. is a provider of enterprise cloud applications for finance and human resources. The Company delivers financial management, human capital management and analytics applications designed for various companies, educational institutions and government agencies. As part of its applications, the Company provides embedded analytics that capture the content and context of everyday business events, facilitating informed decision-making from wherever users are working. Source: Thomson Financial |
Sharek’s Take |
Note: this article was originally published May 8th at 4:25pm with WDAY working a base. The stock broke out this week, is currently trading around $98-99, and I will add it to the Growth Portfolio and Aggressive Growth Portfolio today (May 19). Workday (WDAY) is a rapidly growing company that sports both triple-digit profit growth as well as a triple-digit P/E. Workday’s software unifies company’s human resources and financial data into one program on the cloud so management can see what regions or line of business money is coming in from, click to see which salesmen are delivering the most sales, then jump to view the payroll section. The software is on the cloud, so all this can be done from multiple offices, on the road, or even a coffee shop. Workday claims some heavy hitters in new technology such as Netflix, Amazon, Bank of America, Adobe, and AirBnb. These companies build state-of-the-art software themselves, so they know their stuff. WDAY stock began trading in 2012, opened around $50, shot to a high of $115 within a year and a half, then settled into the current trading range between $75 and $95. At a current price of $92, the stock could break out anytime. But investors have to swallow the fact this company is spending to grow, thus profits are small and the P/E is high. Last year the company spent 43% of sales on research and development, but sales have climbed from $3 million in 2013 to $1.2 billion in 2016 so these investments are paying off. Also, WDAY’s Estimated Long Term Growth Rate of 67% is one of the best in the stock market. Still, the P/E of 184 is super high, thus I have the stock on my radar. Since its in a trading range I will try to buy if it dips. If WDAY breaks out and I am forced to decide if I need to buy high or risk being left behind. |
One Year Chart |
 Here’s WDAY’s profits the past 4 qtrs: $0.05, -$0.04, $0.03 and $0.07. That’s not much, but the company made between -$0.02 and $0.02 in the year ago periods so profit growth has been (mostly) triple-digits. Last qtr WDAY made $0.07 and beat the street by 7 cents. The good news is the company is expected to make $0.16, $0.11, $0.10 and $0.13 the next 4 qtrs so triple-digit growth could continue for another year. Also the higher profits could mean another leg up for the stock. |
Fair Value |
 Profits are expected to be $0.50 this year, $0.81 next year and $1.32 in 2018. You really have to “pay up” for this stock. Or not and possibly be left behind. I just guessed at a P/E of 100 in this table because it’s tough to value the stock on a P/E basis. |
Bottom Line |
 Workday is obviously an exceptional software because software companies themselves are signing up. The company sports triple-digit profit growth, but with a triple-digit P/E the stock carries some risk. If the stock market declines, I would expect this stock to dive due to no fault of its own. But this ten-year chart shows a clear three year base being built and if the stock were to break above $95 on high volume that would be a buy signal. Or on the other hand it could continue to travel back-and-forth for a while. I have WDAY on my radar and try to buy if it comes back down. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
