Workday (WDAY:NAS) Fundamental Valuation Report

Fundamental Valuation Report



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Close Price/Date
$191.53 (USD) 19/03/2019

Weighted Valuation
$174.90 (USD)

Overall Rating
Overvalued by 8.7%

Valuation Models Analyst Consensus: $198.67 (USD)
(in order of importance) Comparables: $149.63 (USD)
Multiples: $154.13 (USD)
Valuation Methods This company is:
Cash Flow: Overvalued on a Cash Flow Valuation
Comparable Company: Overvalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation

Company Overview (WDAY:NAS USD)

Price 191.53
Range 186.81 – 192.08
52 week 117.72 – 197.93
Open 188.61
Vol / Avg. 2.23M/2.28M
Mkt cap 42.52B
P/E 0.00
Div/yield 0.00/0.00
EPS -1.93
Shares 222M
Beta 1.82

Company Description

Workday Inc is a software-as-a-service provider that offers enterprise resource planning software for medium and large enterprises. The firm’s roots are in ERP software vendor PeopleSoft, which was founded by Workday cofounder David Duffield, while fellow Workday cofounder Aneel Bhusri served as vice chairman at PeopleSoft. The company’s product portfolio is centered on human capital and financial management software, though it continues to add new applications to the product set. Just over 75% of the firm’s revenue comes from the U.S.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for WDAY:NAS

Using a discounted cash flow model we generated an intrinsic value of $34.43 (USD) for WDAY:NAS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

WDAY:NAS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $34.43 1% 5% 1% 5%
WACC (or Ke) 15.79 $37.48 $31.83
Terminal Growth Rate 3.00 $32.37 $36.84
Tax Rate 0.01 $36.02 $32.86
Cash Flow 1,055,546,766 $32.84 $36.02
Capital Expenditures -47,462,600 $34.38 $34.49
Long Term Debt 0 $34.43 $34.43

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $107.80 (USD) for WDAY:NAS. We also generated a valuation of $149.63 (USD) using other metrics and comparables.
The comparable companies were Adobe (ADBE:NAS), Autodesk (ADSK:NAS), Akamai Technologies (AKAM:NAS), Ansys (ANSS:NAS) and Cadence Design Systems (CDNS:NAS).

Company WDAY:NAS End Date Value
Earnings/Share ($1.93) (USD)
Book Value/Share $8.82 (USD)
Sales/Share $13.02 (USD)
Cash Flow/Share $2.80 (USD)
EBITDA/Share ($0.76) (USD)
Price Based on Comps Adjustment Factor (%)
$0.00 (USD) 0.0
$77.94 (USD) 0.0
$135.39 (USD) 0.0
$104.51 (USD) 0.0
$0.00 (USD) 0.0
0.00 PE Ratio 43.23 50.48 0.00 39.58 36.32 46.54
22.44 PB Ratio 8.83 13.71 0.00 3.56 5.60 12.46
15.20 PS Ratio 10.40 14.47 13.89 4.34 11.77 7.53
70.73 PCF Ratio 39.33 32.43 94.62 11.69 31.31 26.62
0.00 EV to EBITDA 87.83 40.03 328.59 13.45 26.26 30.80


Using a multiples approach we generated a valuation of  $154.13 (USD) for WDAY:NAS

Company WDAY:NAS End Date Value
Earnings/Share ($1.93) (USD)
Book Value/Share $8.82 (USD)
Sales/Share $13.02 (USD)
Cash Flow/Share $2.80 (USD)
EBITDA/Share ($0.76) (USD)
Price Based on Comps Adjustment Factor
$0.00 (USD) 0
$131.50 (USD) 0
$165.74 (USD) 0
$165.14 (USD) 0
$0.00 (USD) 0
Ratios Ratio Average
PE Ratio 0.00
PB Ratio 14.91
PS Ratio 12.73
PCF Ratio 59.01
EV to EBITDA 0.00

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  WDAY:NAS for the last 6 years was  14.98

We ran the Adjusted Book Value for  WDAY:NAS and generated a book value of  $8.82 (USD)
By multiplying these we get an adjusted valuation of  $132.18 (USD)

Analyst Data

In the Stockcalc database there are 9 analysts that provide a valuation for WDAY:NAS. The 9 analysts have a concensus valuation for WDAY:NAS for 2020 of $198.67 (USD).

WDAY:NAS Workday

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
5 1 2 3.6000 Outperform 2019-3-18

Current Price: 191.53 USD

Analyst Consensus
USD Millions 2020 2021 2022
Mean EPS 1.64 2.18 2.99
# EPS Analysts 10 10 3
Mean Revenue 3,553.80 4,338.30 5,259.40
# Revenue Analysts 9 9 3
Mean Target Price 198.67
Mean Cash Flow 2.79 3.80 4.63
Mean EBITDA 261.60 429.20 409.50
Mean Net Income 404.00 537.40 669.50
Mean Debt Outstanding -553.30 -946.30 -1,857.90
Mean Tax Rate 17.00 17.00
Mean Growth Rate 29.23
Mean Capital Expenditure 300.90 366.40 492.70

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.
The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).
The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.
We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.
Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.
With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.
If we have Analyst coverage for the company we use the consensus target price here.

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