By Rob Otman
Workday (NYSE: WDAY) is a $21 billion company today. Investors that bought shares one year ago are sitting on a 28.93% total return. That’s above the S&P 500’s return of 17.98%.
Workday stock is beating the market, and it reports earnings next week. But does that make it a good buy today? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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✗ Earnings-per-Share (EPS) Growth: Workday reported a recent EPS growth rate of -23.81%. That’s below the software industry average of 23.71%. That’s not a good sign. We like to see companies that have higher earnings growth.
✗ Price-to-Earnings (P/E): Workday’s P/E ratio is incalculable due to negative earnings. That’s not a good sign.
✓ Debt-to-Equity: The debt-to-equity ratio for Workday stock is 45.96%. That’s below the software industry average of 63.43%. The company is less leveraged.
✓ Free Cash Flow per Share Growth: Workday’s FCF has been higher than that of its competitors over the last year. That’s good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.
✗ Profit Margins: The profit margin of Workday comes in at -24.17% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Workday’s profit margin is below the software average of -21.1%. So that’s a negative indicator for investors.
✗ Return on Equity: Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for Workday is -35.52%, and that’s below its industry average ROE of 11.15%.
Workday stock passes two of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Hold With Caution.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth. For more details, click here. …read more
Source:: Investment You
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