In the fast-paced 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 in comparison to its major competitors within the Software industry. By analyzing crucial financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of 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 | 37.87 | 6.91 | 7.51 | 1.32% | $0.23 | $1.5 | 18.17% |
| Adobe Inc | 46.69 | 15.66 | 11.59 | 10.38% | $2.19 | $4.71 | 2.45% |
| Salesforce Inc | 41.45 | 3.74 | 6.34 | 2.57% | $2.6 | $6.97 | 10.74% |
| SAP SE | 87.74 | 4.80 | 6.58 | -1.92% | $-0.42 | $5.76 | 8.06% |
| Intuit Inc | 55.69 | 8.98 | 10.81 | 13.4% | $3.34 | $5.67 | 11.95% |
| Synopsys Inc | 66.82 | 13.12 | 15.09 | 4.23% | $0.41 | $1.15 | 15.2% |
| Cadence Design Systems Inc | 83.88 | 24.59 | 21.55 | 7.1% | $0.36 | $0.88 | -1.23% |
| Roper Technologies Inc | 40.65 | 3.33 | 9.33 | 2.17% | $0.73 | $1.18 | 14.36% |
| Palantir Technologies Inc | 208.50 | 14.76 | 25.12 | 2.91% | $0.09 | $0.52 | 20.78% |
| Autodesk Inc | 52.28 | 23.99 | 9.21 | 12.55% | $0.34 | $1.28 | 11.66% |
| Datadog Inc | 344.62 | 17.80 | 18.65 | 2.02% | $0.06 | $0.5 | 26.89% |
| Ansys Inc | 65.71 | 5.28 | 12.85 | 0.64% | $0.09 | $0.4 | -8.41% |
| AppLovin Corp | 47.27 | 33.96 | 7.71 | 23.28% | $0.45 | $0.76 | 47.9% |
| PTC Inc | 72.25 | 7.03 | 9.25 | 3.98% | $0.21 | $0.49 | 11.23% |
| Tyler Technologies Inc | 105.96 | 6.56 | 10.07 | 1.82% | $0.11 | $0.22 | 8.58% |
| Zoom Video Communications Inc | 21.01 | 2.12 | 3.89 | 2.65% | $0.23 | $0.87 | 3.25% |
| Bentley Systems Inc | 47.47 | 16.50 | 13.64 | 7.74% | $0.12 | $0.28 | 7.43% |
| Manhattan Associates Inc | 76.06 | 59.81 | 15.13 | 20.78% | $0.06 | $0.14 | 15.18% |
| Dynatrace Inc | 87.33 | 6.70 | 9.50 | 1.93% | $0.04 | $0.31 | 21.11% |
| Average | 86.19 | 14.93 | 12.02 | 6.57% | $0.61 | $1.78 | 12.62% |
Through a detailed examination of Workday, we can deduce the following trends:
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A Price to Earnings ratio of 37.87 significantly below the industry average by 0.44x suggests undervaluation. This can make the stock appealing for those seeking growth.
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The current Price to Book ratio of 6.91, which is 0.46x the industry average, is substantially lower than the industry average, indicating potential undervaluation.
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The Price to Sales ratio is 7.51, which is 0.62x the industry average. This suggests a possible undervaluation based on sales performance.
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With a Return on Equity (ROE) of 1.32% that is 5.25% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.
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The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $230 Million is 0.38x below the industry average, suggesting potential lower profitability or financial challenges.
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With lower gross profit of $1.5 Billion, which indicates 0.84x below the industry average, the company may experience lower revenue after accounting for production costs.
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With a revenue growth of 18.17%, which surpasses the industry average of 12.62%, the company is demonstrating robust sales expansion and gaining market share.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio measures the financial leverage of a company by evaluating its debt relative to its equity.
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 evaluating Workday against its top 4 peers in terms of the Debt-to-Equity ratio, the following observations arise:
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When considering the debt-to-equity ratio, Workday exhibits a stronger financial position compared to its top 4 peers.
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This indicates that the company has a favorable balance between debt and equity, with a lower debt-to-equity ratio of 0.41, which can be perceived as a positive aspect by investors.
Key Takeaways
For Workday in the Software industry, the PE, PB, and PS ratios suggest that the company is undervalued compared to its peers. However, the low ROE, EBITDA, and gross profit indicate potential operational inefficiencies. On the positive side, the high revenue growth implies strong top-line performance relative to industry competitors.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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