In today's rapidly changing and highly competitive business world, it is imperative for investors and industry observers to carefully assess companies before making investment choices. In this article, we will undertake a comprehensive industry comparison, evaluating Workday (NASDAQ:WDAY) vis-à-vis its key competitors in the Software industry. Through a detailed analysis of important financial indicators, market standing, and growth potential, our goal is to provide valuable insights and highlight company's performance in the industry.
Workday Background
Workday is a software company that offers human capital management, or HCM, financial management, and business planning solutions. Known for being a cloud-only software provider, Workday is headquartered in Pleasanton, California. Founded in 2005, Workday now employs over 18,000 employees.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Workday Inc | 51.22 | 8.72 | 9.75 | 16.16% | $0.24 | $1.46 | 16.75% |
| Salesforce Inc | 71.34 | 4.87 | 8.46 | 2.46% | $2.75 | $7.14 | 10.77% |
| Adobe Inc | 46.54 | 14.12 | 11.20 | 3.88% | $1.21 | $4.59 | 11.32% |
| SAP SE | 55.07 | 4.59 | 6.41 | 3.05% | $2.32 | $6.2 | 5.02% |
| Intuit Inc | 64.16 | 10.40 | 11.80 | 2.08% | $0.6 | $2.53 | 11.34% |
| Synopsys Inc | 61.95 | 12.83 | 14.21 | 7.01% | $0.53 | $1.32 | 21.15% |
| Cadence Design Systems Inc | 79.74 | 24.39 | 20.31 | 9.94% | $0.41 | $0.96 | 18.75% |
| Roper Technologies Inc | 42.07 | 3.29 | 9.32 | 2.26% | $0.72 | $1.13 | 12.76% |
| Autodesk Inc | 57.04 | 27.56 | 9.39 | 16.9% | $0.35 | $1.34 | 3.89% |
| Palantir Technologies Inc | 249.11 | 14.27 | 23.15 | 2.8% | $0.11 | $0.5 | 19.61% |
| Datadog Inc | 898.86 | 20.62 | 20.71 | 2.82% | $0.07 | $0.48 | 25.62% |
| Ansys Inc | 59.25 | 5.48 | 13.07 | 5.29% | $0.37 | $0.74 | 15.99% |
| MicroStrategy Inc | 59.26 | 12.27 | 52.27 | 5.93% | $-0.04 | $0.1 | -6.09% |
| AppLovin Corp | 77.94 | 20.16 | 8.44 | 14.58% | $0.37 | $0.68 | 35.73% |
| PTC Inc | 91.86 | 7.75 | 9.98 | 2.42% | $0.16 | $0.44 | 18.09% |
| Zoom Video Communications Inc | 30.06 | 2.39 | 4.24 | 3.87% | $0.2 | $0.87 | 2.56% |
| Tyler Technologies Inc | 106.15 | 5.95 | 9.02 | 1.34% | $0.09 | $0.21 | 6.35% |
| NICE Ltd | 47.47 | 4.58 | 6.76 | 2.49% | $0.19 | $0.42 | 9.61% |
| Bentley Systems Inc | 49.87 | 16.79 | 13.50 | 22.81% | $0.05 | $0.24 | 8.26% |
| Manhattan Associates Inc | 84.50 | 52.72 | 16.06 | 19.96% | $0.06 | $0.13 | 20.27% |
| Dynatrace Inc | 71.89 | 7.34 | 10.34 | 2.3% | $0.05 | $0.3 | 22.74% |
| Average | 115.21 | 13.62 | 13.93 | 6.71% | $0.53 | $1.52 | 13.69% |
By thoroughly analyzing Workday, we can discern the following trends:
A Price to Earnings ratio of 51.22 significantly below the industry average by 0.44x suggests undervaluation. This can make the stock appealing for those seeking growth.
The current Price to Book ratio of 8.72, which is 0.64x the industry average, is substantially lower than the industry average, indicating potential undervaluation.
The Price to Sales ratio is 9.75, which is 0.7x the industry average. This suggests a possible undervaluation based on sales performance.
The company has a higher Return on Equity (ROE) of 16.16%, which is 9.45% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
Compared to its industry, the company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $240 Million, which is 0.45x below the industry average, potentially indicating lower profitability or financial challenges.
The gross profit of $1.46 Billion is 0.96x below that of its industry, suggesting potential lower revenue after accounting for production costs.
The company's revenue growth of 16.75% exceeds the industry average of 13.69%, indicating strong sales performance and market outperformance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a financial metric that helps determine the level of financial risk associated with a company's capital structure.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
In terms of the Debt-to-Equity ratio, Workday can be assessed by comparing it to its top 4 peers, resulting in the following observations:
Workday has a stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.41.
This suggests that the company has a more favorable balance between debt and equity, which can be perceived as a positive indicator by investors.
Key Takeaways
For Workday in the Software industry, its low PE, PB, and PS ratios suggest the stock is undervalued compared to peers. The high ROE indicates strong profitability, while low EBITDA and gross profit ratios may raise concerns about operational efficiency. The high revenue growth rate reflects a positive outlook for future performance relative to industry competitors.
This article was generated by Benzinga's automated content engine and reviewed by an editor.