Comparative Study: Workday And Industry Competitors In Software Industry

In the dynamic and cutthroat world of business, conducting thorough company analysis is essential for investors and industry experts. In this article, we will undertake a comprehensive industry comparison, evaluating Workday WDAY and its primary competitors in the Software industry. By closely examining key financial metrics, market position, and growth prospects, our aim is to provide valuable insights for investors and shed light on company's performance within 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 12,000 employees.

Company P/E P/B P/S ROE EBITDA (in billions) Gross Profit (in billions) Revenue Growth
Workday Inc 1274.75 12.15 11.50 1.76% $0.23 $1.42 16.67%
Salesforce Inc 111.33 4.88 8.49 2.11% $2.42 $6.57 11.27%
Adobe Inc 46.82 15.14 13.09 9.18% $2.06 $4.41 11.56%
SAP SE 55.82 4.62 6.44 2.75% $2.23 $6.2 9.34%
Intuit Inc 67.39 10.92 12.39 2.08% $0.6 $2.53 11.34%
Synopsys Inc 63.54 13.16 14.58 7.01% $0.42 $1.32 3.13%
Cadence Design Systems Inc 79.46 24.27 20.24 9.94% $0.41 $0.96 18.75%
Roper Technologies Inc 43.71 3.42 9.68 2.26% $0.72 $1.13 12.76%
Autodesk Inc 60.66 37.12 10.42 17.93% $0.37 $1.29 10.47%
Palantir Technologies Inc 255.22 14.62 23.72 2.8% $0.11 $0.5 19.61%
Datadog Inc 925.07 21.22 21.32 2.82% $0.07 $0.48 7.69%
Ansys Inc 59.49 5.50 13.12 5.29% $0.37 $0.74 15.99%
Splunk Inc 225.43 131.82 6.48 121.15% $0.14 $0.86 14.8%
PTC Inc 91.38 7.71 9.93 2.42% $0.16 $0.44 18.09%
AppLovin Corp 58.56 15.53 6.34 14.58% $0.37 $0.68 10.3%
Zoom Video Communications Inc 83.42 2.60 4.30 1.96% $0.2 $0.87 3.16%
Tyler Technologies Inc 112.75 6.30 9.59 1.34% $0.09 $0.21 6.35%
Bentley Systems Inc 94.85 22.33 14.37 7.94% $0.1 $0.24 14.27%
Manhattan Associates Inc 88.26 55.07 16.78 19.96% $0.06 $0.13 20.27%
NICE Ltd 46.61 4.52 6.64 2.49% $0.16 $0.42 3.63%
Dynatrace Inc 75.77 7.73 10.90 2.3% $0.05 $0.3 22.74%
Average 132.28 20.42 11.94 11.92% $0.56 $1.51 12.28%

By conducting a comprehensive analysis of Workday, the following trends become evident:

  • The Price to Earnings ratio of 1274.75 for this company is 9.64x above the industry average, indicating a premium valuation associated with the stock.

  • Considering a Price to Book ratio of 12.15, which is well below the industry average by 0.6x, the stock may be undervalued based on its book value compared to its peers.

  • Based on its sales performance, the stock could be deemed undervalued with a Price to Sales ratio of 11.5, which is 0.96x the industry average.

  • The company has a lower Return on Equity (ROE) of 1.76%, which is 10.16% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.

  • The company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $230 Million, which is 0.41x below the industry average. This potentially indicates lower profitability or financial challenges.

  • The company has lower gross profit of $1.42 Billion, which indicates 0.94x below the industry average. This potentially indicates lower revenue after accounting for production costs.

  • The company's revenue growth of 16.67% is notably higher compared to the industry average of 12.28%, showcasing exceptional sales performance and strong demand for its products or services.

Debt To Equity Ratio

debt to equity

The debt-to-equity (D/E) ratio is a key indicator of a company's financial health and its reliance on debt financing.

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.

By considering the Debt-to-Equity ratio, Workday can be compared to its top 4 peers, leading to the following observations:

  • Workday exhibits a stronger financial position compared to its top 4 peers in the sector, as indicated by its lower debt-to-equity ratio of 0.49.

  • This suggests that the company has a more favorable balance between debt and equity, which can be seen as a positive aspect for investors.

Key Takeaways

For Workday in the Software industry, the PE ratio is high compared to peers, indicating potential overvaluation. The PB and PS ratios are low, suggesting undervaluation relative to industry peers. In terms of ROE, EBITDA, gross profit, and revenue growth, Workday shows lower performance levels compared to its industry counterparts.

This article was generated by Benzinga's automated content engine and reviewed by an editor.

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