Workday (WDAY) Outpaces Stock Market Gains: What You Should Know

In the latest close session, Workday (WDAY) was up +1.41% at $160.34. The stock's performance was ahead of the S&P 500's daily gain of 0.7%. At the same time, the Dow added 0.53%, and the tech-heavy Nasdaq gained 1%.

The maker of human resources software's shares have seen an increase of 16.77% over the last month, surpassing the Computer and Technology sector's loss of 6.59% and the S&P 500's loss of 0.49%.

Analysts and investors alike will be keeping a close eye on the performance of Workday in its upcoming earnings disclosure. The company is expected to report EPS of $2.63, up 19% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $2.63 billion, up 12.18% from the year-ago period.

For the full year, the Zacks Consensus Estimates project earnings of $10.81 per share and a revenue of $10.66 billion, demonstrating changes of +17.12% and +11.58%, respectively, from the preceding year.

Investors might also notice 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 business outlook.

Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. To take advantage of this, we've established the Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational rating system.

The Zacks Rank system, stretching from #1 (Strong Buy) to #5 (Strong Sell), has a noteworthy track record of outperforming, validated by third-party audits, with stocks rated #1 producing an average annual return of +25% since the year 1988. Over the last 30 days, the Zacks Consensus EPS estimate has moved 0.57% higher. At present, Workday boasts a Zacks Rank of #3 (Hold).

From a valuation perspective, Workday is currently exchanging hands at a Forward P/E ratio of 14.63. For comparison, its industry has an average Forward P/E of 20.16, which means Workday is trading at a discount to the group.

It's also important to note that WDAY currently trades at a PEG ratio of 0.84. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. Internet - Software stocks are, on average, holding a PEG ratio of 1.18 based on yesterday's closing prices.

The Internet - Software industry is part of the Computer and Technology sector. With its current Zacks Industry Rank of 88, this industry ranks in the top 36% of all industries, numbering over 250.

Story Continues

The Zacks Industry Rank gauges the strength of our 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.

Don't forget to use Zacks.com to keep track of all these stock-moving metrics, and others, in the upcoming trading sessions.

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Workday, Inc. (WDAY) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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