In today's fast-paced and highly competitive business world, it is crucial for investors and industry followers to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating Workday (NASDAQ:WDAY) in relation to its major competitors in the Software industry. By closely examining key financial metrics, market standing, and growth prospects, our objective 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 | 40.75 | 7.43 | 8.08 | 1.32% | $0.23 | $1.5 | 18.17% |
| Salesforce Inc | 47.25 | 4.27 | 7.23 | 2.57% | $2.6 | $6.97 | 10.74% |
| SAP SE | 91.17 | 5.52 | 7.11 | 2.1% | $1.94 | $6.02 | 9.72% |
| Adobe Inc | 48.83 | 16.21 | 12.12 | 10.38% | $2.19 | $4.71 | 10.24% |
| Intuit Inc | 58.54 | 9.44 | 11.37 | 13.4% | $3.34 | $5.67 | 11.95% |
| Synopsys Inc | 59.60 | 11.71 | 13.46 | 4.23% | $0.41 | $1.15 | 15.2% |
| Cadence Design Systems Inc | 67.02 | 16.62 | 16.97 | 5.86% | $0.38 | $0.92 | 8.61% |
| Palantir Technologies Inc | 226.50 | 16.03 | 27.29 | 2.91% | $0.09 | $0.52 | 20.78% |
| Roper Technologies Inc | 41.02 | 3.24 | 8.99 | 1.88% | $0.69 | $1.19 | 2.15% |
| Autodesk Inc | 52.36 | 24.02 | 9.23 | 12.55% | $0.34 | $1.28 | 11.66% |
| Datadog Inc | 347.94 | 17.97 | 18.83 | 2.02% | $0.06 | $0.5 | 26.89% |
| Ansys Inc | 62.70 | 5.04 | 12.26 | 0.64% | $0.09 | $0.4 | -8.41% |
| AppLovin Corp | 46.70 | 33.55 | 7.62 | 23.28% | $0.45 | $0.76 | 47.9% |
| Tyler Technologies Inc | 122.29 | 8.01 | 12.53 | 2.2% | $0.11 | $0.24 | 5.59% |
| PTC Inc | 72.72 | 7.07 | 9.31 | 3.98% | $0.21 | $0.49 | 11.23% |
| Zoom Video Communications Inc | 22.17 | 2.24 | 4.10 | 2.65% | $0.23 | $0.87 | 3.25% |
| Manhattan Associates Inc | 78.80 | 65.78 | 16.20 | 21.98% | $0.07 | $0.15 | 4.23% |
| Bentley Systems Inc | 44.93 | 15.62 | 12.91 | 7.74% | $0.12 | $0.28 | 7.43% |
| Dynatrace Inc | 85.19 | 6.55 | 9.27 | 1.93% | $0.04 | $0.31 | 21.11% |
| Average | 87.54 | 14.94 | 12.04 | 6.79% | $0.74 | $1.8 | 12.24% |
By closely studying Workday, we can observe the following trends:
A Price to Earnings ratio of 40.75 significantly below the industry average by 0.47x suggests undervaluation. This can make the stock appealing for those seeking growth.
With a Price to Book ratio of 7.43, significantly falling below the industry average by 0.5x, it suggests undervaluation and the possibility of untapped growth prospects.
With a relatively low Price to Sales ratio of 8.08, which is 0.67x the industry average, the stock might be considered undervalued based on sales performance.
The company has a lower Return on Equity (ROE) of 1.32%, which is 5.47% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.
The Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $230 Million is 0.31x below the industry average, suggesting potential lower profitability or financial challenges.
The gross profit of $1.5 Billion is 0.83x below that of its industry, suggesting potential lower revenue after accounting for production costs.
The company is experiencing remarkable revenue growth, with a rate of 18.17%, outperforming the industry average of 12.24%.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is an important measure to assess the financial structure and risk profile of a company.
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 stands in comparison with its top 4 peers, leading to the following comparisons:
When considering the debt-to-equity ratio, Workday exhibits a stronger financial position compared to its top 4 peers.
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 are all low compared to peers, indicating potential undervaluation. However, the low ROE, EBITDA, and gross profit suggest lower profitability levels. On the positive side, the high revenue growth rate stands out among industry peers, indicating strong potential for future growth and market share expansion.
This article was generated by Benzinga's automated content engine and reviewed by an editor.