Stock (Symbol) |
Workday (WDAY) |
Stock Price |
$99 |
Sector |
| Technology |
Data is as of |
| July 11, 2017 |
Expected to Report |
| Aug 22 |
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 |
 Workday (WDAY) 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 as clients such as Netflix, Amazon, Bank of America, Adobe, and AirBnb. These companies built revolutionary software themselves, so they know their stuff. 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. WDAY’s Estimated Long Term Growth Rate of 81% is one of the best in the stock market, but the stock sells for 152x 2017 earnings. The catch is if you don’t buy in now, you could be left behind, like I was with Yahoo (YHOO) back in the 1990s (I didn’t buy, it skied higher). Here’s why I feel this stock could be the next big winner in the stock market:
4QtrsAgo -$0.04 vs. $0.02 = N/A, missed by a penny Above are the last 4 qtrs for WDAY. So if the company keeps whipping estimates with bigger profits, is the P/E really that high? Workday is a rapidly growing company that sports both triple-digit profit growth as well as a triple-digit P/E. If the company can keep beating the street the stock could go on a run — and make WDAY the next big winner. |
One Year Chart |
 Workday’s sales increased 38% last qtr. Total revenue was $1.2 billion in 2015, $1.6 billion in 2016 and estimates are for $2.0 billion this year. Since the company has easy comparisons from a year-ago (see above) profits are growing at a triple-digit rate. The wild card here is NxtQtr’s Est is $0.15 vs. -$0.04 = 475%. If the company made $0.30 ore more in the qtr ended June 30th, the stock could go on a tear higher because that’s blue sky with profits. They could go to forty cents, fifty cents, who knows? The company could be making $1 a qtr in the near future. That kind of element makes it so you can’t question the high valuation — you don’t know what the valuation is. 2017 est just rose from $0.50 to $0.65. 2018’s from $0.81 to $0.91. So maybe WDAY makes $2 next year? Then in retrospect buying in at $100 isn’t so high. Profit Estimates for the next 4qtrs are 475%, 233%, 71%, and -10% (this last # is bad cuz WDAY just had a big beat and analysts haven’t done their updates). |
Fair Value |
 So profits might go from $0.12 last year to $0.65 this year and $0.93 next year. But its too early to tell. Since the stock has a high valuation I like to think: ok, I’ll buy high and think that if it was too high, the earnings will eventually catch up in the P/E calculation. But with WDAY investors are accepting the fact as an investor you have to think long-term. |
Bottom Line |
 Workday an exceptional software because some of the more technologically advanced companies in the world use it. YEs the stock is expensive, but if you decide not to buy then you could get left behind like I did with Salesforce when it was in the $30s. WDAY ranks 13th in the Growth Portfolio and Aggressive Growth Portfolio. |
Power Rankings |
Growth Stock Portfolio
13 of 33Aggressive Growth Portfolio 13 of 16Conservative Stock Portfolio N/A |
