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Close-up of the logo on the facade of Workday’s headquarters in Pleasanton, California… [+] 26th of March, 2018. (Smith Collection/Gado/Getty Images photo)
courtesy of Getty Images
We believe Workday Inc. stock (NASDAQ: WDAY) has further upside potential after rising 2x from its bottom in March 2020 to its current price of $233 per share. Workday’s stock has risen from $115 in March 2020 to $233 today, a little more than the S&P 500, which has risen by about 95% from its lows. Furthermore, the stock is nearly 20% higher than it was prior to the outbreak. Expectations of continued demand growth and excellent Q1 2022 results, however, lead us to anticipate that Workday stock might advance roughly 20% to reclaim its 2021 high of $280. What Factors Caused A 129 Percent Change In Workday Stock Between 2017 And Now, According To Our Dashboard? contains the numbers that support our assumptions.
Price of a Stock
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Workday Inc., a financial and human capital management software company, has seen its stock price climb since the end of 2017 as a result of a 101 percent increase in sales from $2.14 billion in FY 2018 to $4.32 billion LTM (Workday’s fiscal year ends in January). Despite a 15% increase in outstanding shares during this time, RPS (revenue-per-share) increased by 75% from $10.30 in FY 2018 to $18.10.
Meanwhile, Workday’s P/S (price-to-sales) multiple has risen from 9x in 2017 to 13x now, but we believe that the company’s P/S ratio has the potential to rise in the near term as a result of expectations of continued demand growth and a favorable shareholder return policy, which will drive the stock price higher.
What Is The Future Of The Stock?
The global spread of coronavirus, as well as the ensuing lockdowns, has boosted online activity and accelerated the trend to working from home. As seen by Workday’s FY 2021 earnings, which came in at $3.79 billion, a significant rise from $3.1 billion in FY 2020, more firms are turning to third-party human capital management vendors for enhanced convenience. In addition, Workday’s sales increased to $1.03 billion in Q1 2022, up from $882 million in the same quarter last year. Workday reported a $38 million operating loss in Q1 2021, compared to $144 million in Q1 2021, thanks to lower operational expenses. Over this time period, this helped boost EPS to -$0.19 from -$0.68.
ADDITIONAL INFORMATION FOR YOU
We also predict that the company’s revenue growth will be robust in the medium term, as demand for the company’s products and services is expected to remain strong. In the short to medium term, if Workday continues to successfully cut expenses, profitability could climb even further. This will enhance investor expectations, resulting in a higher P/S multiple for the company. Workday’s stock, we estimate, can recover nearly 20% from present levels to reclaim its early 2021 high of $280.
While Workday Inc.’s stock may rise, it’s important to know how its competitors fare. Workday Inc. Stock Comparison With Peers shows how Workday stacks up against its competitors on key performance indicators. Peer Comparisons has a lot more of these kinds of valuable comparisons.
Here you may find all of Trefis’ Featured Analyses and Trefis Data./nRead More

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