In today's rapidly evolving and fiercely competitive business landscape, it is crucial for investors and industry analysts to conduct comprehensive company evaluations. In this article, we will undertake an in-depth industry comparison, assessing Workday WDAY alongside its primary competitors in the Software industry. By meticulously examining crucial financial indicators, market positioning, and growth potential, we aim to provide valuable insights to 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 18,000 employees.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| Workday Inc | 41.42 | 7.63 | 8.20 | 1.6% | $0.28 | $1.57 | 16.68% |
| Salesforce Inc | 50.67 | 4.82 | 7.82 | 2.44% | $2.79 | $7.17 | 8.39% |
| SAP SE | 97.37 | 5.89 | 7.59 | 2.1% | $1.94 | $6.02 | 9.72% |
| Adobe Inc | 42.55 | 15.21 | 10.89 | 11.46% | $2.31 | $4.85 | 10.59% |
| Intuit Inc | 58.43 | 9.26 | 10.63 | -0.11% | $0.13 | $2.4 | 17.4% |
| Palantir Technologies Inc | 246.65 | 23.18 | 40.18 | 3.43% | $0.11 | $0.55 | 27.15% |
| Synopsys Inc | 51.69 | 9.99 | 12.04 | 5.49% | $0.46 | $1.24 | 12.65% |
| Cadence Design Systems Inc | 68.12 | 16.90 | 17.25 | 5.86% | $0.38 | $0.92 | 8.61% |
| Autodesk Inc | 59.26 | 25.19 | 10.79 | 12.17% | $0.39 | $1.36 | 11.9% |
| Roper Technologies Inc | 41.92 | 3.31 | 9.19 | 1.88% | $0.69 | $1.19 | 12.12% |
| AppLovin Corp | 61.90 | 59.42 | 12.83 | 39.35% | $0.51 | $0.8 | 43.98% |
| Datadog Inc | 268.09 | 17.65 | 19.38 | 1.9% | $0.06 | $0.52 | 26.66% |
| Ansys Inc | 57.20 | 5.06 | 12.20 | 2.37% | $0.2 | $0.52 | 19.64% |
| Tyler Technologies Inc | 122.15 | 8.04 | 12.52 | 2.2% | $0.12 | $0.24 | 7.28% |
| PTC Inc | 75.30 | 7.35 | 10.02 | 2.32% | $0.13 | $0.41 | -4.37% |
| Zoom Video Communications Inc | 24.62 | 2.49 | 4.71 | 2.6% | $0.23 | $0.88 | 2.09% |
| Manhattan Associates Inc | 92.49 | 77.21 | 19.01 | 21.98% | $0.07 | $0.15 | 14.85% |
| Dynatrace Inc | 103.27 | 7.74 | 10.78 | 1.89% | $0.06 | $0.32 | 19.93% |
| Average | 89.51 | 17.57 | 13.4 | 7.02% | $0.62 | $1.74 | 14.62% |
When conducting a detailed analysis of Workday, the following trends become clear:
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A Price to Earnings ratio of 41.42 significantly below the industry average by 0.46x suggests undervaluation. This can make the stock appealing for those seeking growth.
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With a Price to Book ratio of 7.63, significantly falling below the industry average by 0.43x, it suggests undervaluation and the possibility of untapped growth prospects.
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Based on its sales performance, the stock could be deemed undervalued with a Price to Sales ratio of 8.2, which is 0.61x the industry average.
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With a Return on Equity (ROE) of 1.6% that is 5.42% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.
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Compared to its industry, the company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $280 Million, which is 0.45x below the industry average, potentially indicating lower profitability or financial challenges.
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Compared to its industry, the company has lower gross profit of $1.57 Billion, which indicates 0.9x below the industry average, potentially indicating lower revenue after accounting for production costs.
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The company's revenue growth of 16.68% exceeds the industry average of 14.62%, indicating strong sales performance and market outperformance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio indicates the proportion of debt and equity used by a company to finance its assets and operations.
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:
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Workday is in a relatively stronger financial position compared to its top 4 peers, as evidenced by its lower debt-to-equity ratio of 0.4.
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This implies that the company relies less on debt financing and has a more favorable balance between debt and equity.
Key Takeaways
For Workday in the Software industry, the PE, PB, and PS ratios are all low compared to its peers, indicating potential undervaluation. However, the low ROE, EBITDA, and gross profit suggest lower profitability and operational efficiency. On the positive side, the high revenue growth rate implies strong top-line performance compared to industry peers. Overall, Workday's valuation appears attractive based on its low valuation multiples, but its profitability metrics lag behind industry standards.
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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