Workday Inc (WDAY)

Conclusion

Workday Inc (WDAY.US) sells enterprise cloud applications for finance, human capital management, spend management and planning. At 190.21 USD on 2026-11-09, the stock has a market capitalisation of 37.3 billion USD and an enterprise value of 37.7 billion USD.

The verdict is undervalued. Today's multiples sit well below their own ten-year medians: enterprise value to EBITDA is 22.6x against a median of 118.7x, and price to free cash flow is 13.1x against 50.1x. The fair value band runs from 339.69 to 509.53 USD with a midpoint of 424.61 USD, a margin of safety of 123.2% at the current price. The discounted cash flow gives 210.85 USD per share, and the fair value from historical multiples is 638.38 USD. The reverse DCF implies growth of 13.6% a year, against revenue growth of 17.2% a year over five years and free cash flow per share growth of 19.8% a year.

The strongest supports are free cash flow conversion of 227.3% over the last twelve months, eight earnings beats in eight quarters, and an operating margin of 12.0% against a ten-year median of -4.7%. The weakest numbers are the current ratio of 0.91, stock-based compensation at 16.2% of revenue, and a share count that has risen 2.1% a year over five years.

Financial health

The financial strength is green, held up by interest coverage of 11.7x, net debt to EBITDA of 0.22x and an Altman Z-score of 3.28, with the current ratio of 0.91 as the only neutral point. The current ratio of 0.91 and quick ratio of 0.81, both as of 2026-07-31, mean short-term assets are slightly below short-term liabilities, and the company's own label for the current ratio is watch. Debt to equity stands at 0.58. The Altman Z-score of 3.28 falls in the safe zone, but that model was designed for manufacturers and this company is a software business, so the result is a rough guide. Insolvency risk: low, about 0.4% by the estimate of the Ohlson model over one to two years.

Earnings quality

The earnings quality is green, supported by free cash flow conversion of 227.3% over the last twelve months and 422.3% over five years, a Piotroski score of 8 out of 9, and a Beneish M-score of -2.90, which is a reading unlikely to indicate manipulation. Accruals are -12.5% of the ratio base for the latest annual year, which points to cash earnings. Stock-based compensation equals 16.2% of revenue, and free cash flow after it is 1.198 billion USD. The share count has grown 2.1% a year over five years, so the company has been diluting shareholders rather than buying back stock. The company beat its earnings estimates in all eight of the last quarters, with an average surprise of 19.3%. Analysts have raised next-year estimates, with 38 upward revisions and one downward in the last 30 days.

Profitability

The profitability is green, with return on invested capital of 13.1% against a weighted cost of capital of 9.3%, giving a ROIC minus WACC value of 3.8%. The five-year median ROIC is 9.05%. Margins have moved far from their ten-year medians: gross margin is 75.8% against 72.2%, operating margin is 12.0% against -4.7%, and net margin is 12.3% against -6.2%. Return on equity is 19.4%, but the DuPont split as of 2026-01-31 shows a net margin of 7.3%, an asset turnover of 0.53 and an equity multiplier of 2.32, so leverage contributes a large part of that return. The operating margin stability figure is 1.66.

Growth

The growth is green. Revenue has compounded at 15.4% over three years, 17.2% over five years and 23.5% over ten years. Revenue grew in all 10 of the 10 comparable years. Free cash flow per share compounded at 27.5% over three years, 19.8% over five years and 32.0% over ten years. The next-year EPS estimate implies growth of 19.5%. Growth has been consistent, though it is decelerating from the ten-year pace.

Valuation

The valuation is green. Current multiples are a P/E of 29.8, an enterprise value to EBITDA of 22.6x, a price to free cash flow of 13.1x, a price to sales of 3.7x and a price to book of 5.8x. Against their ten-year medians, the current figures show discounts of 81.0% on enterprise value to EBITDA, 73.9% on price to free cash flow, 65.4% on price to sales and 57.9% on price to book. The historical median for P/E is not available because only four data points exist. The DCF gives 210.85 USD per share at a discount rate of 9.94%, and the terminal value makes up 58.4% of it. The fair value band is built on fixed assumptions, including a 5% equity risk premium and capped growth, so it is an order of magnitude and not a price target. The company pays no dividend.

Risks

The main risk is liquidity: a current ratio of 0.91 and a quick ratio of 0.81 leave little margin if short-term obligations rise faster than cash. Stock-based compensation at 16.2% of revenue and annual dilution of 2.1% would reduce per-share value if they persisted. The Altman Z-score's safe reading may overstate solvency for a software business. The valuation range is wide: the DCF gives 210.85 USD, the fair value band runs from 339.69 to 509.53 USD, and the historical-multiple value is 638.38 USD, so the conclusion depends heavily on which method is trusted. Several values are not available, including the historical P/E median. This analysis has no debt maturity schedule and no revenue by segment, so refinancing timing and the contribution of individual businesses cannot be assessed.