Workday shares jump 60%: Can they keep rising?

Workday shares jump 60%: Can they keep rising?


Workday (WDAY) is a leading company in cloud software applications for financial management, human resource management, and data analysis, among other services for companies. The software as services industry has generated exceptionally attractive growth rates in recent years, and Workday has been one of the main beneficiaries of this trend.

Workday sales during the last quarter amounted to 743.2 million dollars, a growth rate of 33.8% compared to the same quarter in the previous year. Subscription revenues grew 29.4%, reaching 624.4 million dollars in the quarter. Additionally, the professional services segment generated sales growth of 29.4%, to 118.8 million dollars in the period.

In a sign of confidence, the management of the company increased its sales forecasts for the current year. The previous range was at $2.76B-$2.77B, and the new range of expectations is between 2.80 and 2.81 billion dollars in expected sales.

Adjusted earnings per share, which exclude one-time costs amounted to $ 0.31 per unit. The figure more than doubled compared to the expectations of analysts, at levels of $0.14 per share.

In the case of Workday, a gain of 60% this year is clearly a more than attractive return, especially when compared to a gain of 2.3% for SPDR ET S & P 500 (SPY) and 6.9% for the ETF Technology Select Sector SPDR (XLK).

In terms of relative strength, compared to the market in general and the technology sector in particular, Workday shares are showing exceptional strength. Being a high growth business, Workday re-invests a good part of the profits and cash flows generated by the business. In recent weeks there has been a sharp drop in appetite for risk in global financial markets. When this happens, investors tend to focus on assets with stable and predictable results, while high volatility stocks are usually impacted downward. Workday has reported exceptionally strong results in the last quarter, leading the stock price to remain strong despite the market decline.

For investors, who are looking for a high growth company with explosive returns in a challenging environment, Workday seems to be an interesting option to consider.

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I am a lecturer at the University of Economics in Bratislava, department of Banking and International Finance. I have a Ph.D. academic degree, my dissertation was focused on major markets. Commodities and stock markets are also the main focus of my research and publication activities. I have approximately 10 years of investing experiences. My investments mostly focus on small- to mid-cap companies of energy sector, financial and technology.