Intrinsic value of Workday - WDAY

Previous Close

$107.18

  Intrinsic Value

$2.54

stock screener

  Rating & Target

str. sell

-98%

  Value-price divergence*

-99%

Previous close

$107.18

 
Intrinsic value

$2.54

 
Up/down potential

-98%

 
Rating

str. sell

 
Value-price divergence*

-99%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of WDAY stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 22.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  35.03
  37.90
  34.61
  31.65
  28.98
  26.59
  24.43
  22.48
  20.74
  19.16
  17.75
  16.47
  15.32
  14.29
  13.36
  12.53
  11.77
  11.10
  10.49
  9.94
  9.44
  9.00
  8.60
  8.24
  7.92
  7.62
  7.36
  7.13
  6.91
  6.72
  6.55
Revenue, $m
  1,569
  2,164
  2,912
  3,834
  4,946
  6,260
  7,790
  9,541
  11,520
  13,727
  16,163
  18,825
  21,710
  24,813
  28,129
  31,652
  35,379
  39,305
  43,426
  47,742
  52,251
  56,954
  61,851
  66,948
  72,248
  77,756
  83,480
  89,429
  95,611
  102,038
  108,721
Variable operating expenses, $m
 
  2,651
  3,563
  4,686
  6,039
  7,641
  9,503
  11,636
  14,046
  16,734
  19,701
  22,928
  26,441
  30,220
  34,259
  38,550
  43,089
  47,870
  52,890
  58,147
  63,638
  69,365
  75,331
  81,538
  87,992
  94,701
  101,673
  108,918
  116,448
  124,275
  132,414
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  1,961
  2,651
  3,563
  4,686
  6,039
  7,641
  9,503
  11,636
  14,046
  16,734
  19,701
  22,928
  26,441
  30,220
  34,259
  38,550
  43,089
  47,870
  52,890
  58,147
  63,638
  69,365
  75,331
  81,538
  87,992
  94,701
  101,673
  108,918
  116,448
  124,275
  132,414
Operating income, $m
  -392
  -487
  -651
  -851
  -1,094
  -1,380
  -1,713
  -2,095
  -2,526
  -3,007
  -3,538
  -4,103
  -4,731
  -5,407
  -6,130
  -6,898
  -7,710
  -8,566
  -9,464
  -10,404
  -11,387
  -12,412
  -13,479
  -14,590
  -15,745
  -16,945
  -18,193
  -19,489
  -20,837
  -22,237
  -23,694
EBITDA, $m
  -276
  -382
  -514
  -677
  -873
  -1,105
  -1,375
  -1,684
  -2,034
  -2,423
  -2,853
  -3,323
  -3,832
  -4,380
  -4,966
  -5,588
  -6,245
  -6,938
  -7,666
  -8,428
  -9,224
  -10,054
  -10,919
  -11,818
  -12,754
  -13,726
  -14,737
  -15,787
  -16,878
  -18,013
  -19,192
Interest expense (income), $m
  6
  19
  4
  23
  47
  75
  109
  148
  193
  243
  299
  362
  430
  503
  582
  667
  757
  852
  952
  1,058
  1,168
  1,283
  1,403
  1,528
  1,658
  1,793
  1,934
  2,080
  2,232
  2,390
  2,554
Earnings before tax, $m
  -409
  -506
  -655
  -875
  -1,140
  -1,455
  -1,822
  -2,243
  -2,719
  -3,250
  -3,838
  -4,464
  -5,161
  -5,911
  -6,712
  -7,565
  -8,467
  -9,418
  -10,416
  -11,462
  -12,555
  -13,695
  -14,882
  -16,118
  -17,403
  -18,739
  -20,127
  -21,569
  -23,068
  -24,627
  -26,247
Tax expense, $m
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -408
  -506
  -655
  -875
  -1,140
  -1,455
  -1,822
  -2,243
  -2,719
  -3,250
  -3,838
  -4,464
  -5,161
  -5,911
  -6,712
  -7,565
  -8,467
  -9,418
  -10,416
  -11,462
  -12,555
  -13,695
  -14,882
  -16,118
  -17,403
  -18,739
  -20,127
  -21,569
  -23,068
  -24,627
  -26,247

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  1,997
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  3,268
  1,753
  2,360
  3,107
  4,008
  5,073
  6,313
  7,732
  9,335
  11,124
  13,098
  15,255
  17,593
  20,108
  22,795
  25,650
  28,670
  31,851
  35,192
  38,689
  42,343
  46,154
  50,123
  54,253
  58,547
  63,011
  67,650
  72,471
  77,481
  82,689
  88,104
Adjusted assets (=assets-cash), $m
  1,271
  1,753
  2,360
  3,107
  4,008
  5,073
  6,313
  7,732
  9,335
  11,124
  13,098
  15,255
  17,593
  20,108
  22,795
  25,650
  28,670
  31,851
  35,192
  38,689
  42,343
  46,154
  50,123
  54,253
  58,547
  63,011
  67,650
  72,471
  77,481
  82,689
  88,104
Revenue / Adjusted assets
  1.234
  1.234
  1.234
  1.234
  1.234
  1.234
  1.234
  1.234
  1.234
  1.234
  1.234
  1.234
  1.234
  1.234
  1.234
  1.234
  1.234
  1.234
  1.234
  1.234
  1.234
  1.234
  1.234
  1.234
  1.234
  1.234
  1.234
  1.234
  1.234
  1.234
  1.234
Average production assets, $m
  325
  448
  603
  794
  1,024
  1,296
  1,612
  1,975
  2,385
  2,841
  3,346
  3,897
  4,494
  5,136
  5,823
  6,552
  7,323
  8,136
  8,989
  9,883
  10,816
  11,789
  12,803
  13,858
  14,955
  16,095
  17,280
  18,512
  19,791
  21,122
  22,505
Working capital, $m
  1,239
  -1,045
  -1,407
  -1,852
  -2,389
  -3,024
  -3,762
  -4,608
  -5,564
  -6,630
  -7,807
  -9,093
  -10,486
  -11,985
  -13,586
  -15,288
  -17,088
  -18,984
  -20,975
  -23,059
  -25,237
  -27,509
  -29,874
  -32,336
  -34,896
  -37,556
  -40,321
  -43,194
  -46,180
  -49,284
  -52,512
Total debt, $m
  534
  121
  667
  1,339
  2,150
  3,109
  4,224
  5,502
  6,945
  8,555
  10,331
  12,273
  14,377
  16,640
  19,058
  21,628
  24,346
  27,209
  30,215
  33,363
  36,652
  40,081
  43,653
  47,371
  51,236
  55,253
  59,428
  63,767
  68,276
  72,963
  77,837
Total liabilities, $m
  1,992
  1,578
  2,124
  2,796
  3,607
  4,566
  5,681
  6,959
  8,402
  10,012
  11,788
  13,730
  15,834
  18,097
  20,515
  23,085
  25,803
  28,666
  31,672
  34,820
  38,109
  41,538
  45,110
  48,828
  52,693
  56,710
  60,885
  65,224
  69,733
  74,420
  79,294
Total equity, $m
  1,277
  175
  236
  311
  401
  507
  631
  773
  934
  1,112
  1,310
  1,526
  1,759
  2,011
  2,279
  2,565
  2,867
  3,185
  3,519
  3,869
  4,234
  4,615
  5,012
  5,425
  5,855
  6,301
  6,765
  7,247
  7,748
  8,269
  8,810
Total liabilities and equity, $m
  3,269
  1,753
  2,360
  3,107
  4,008
  5,073
  6,312
  7,732
  9,336
  11,124
  13,098
  15,256
  17,593
  20,108
  22,794
  25,650
  28,670
  31,851
  35,191
  38,689
  42,343
  46,153
  50,122
  54,253
  58,548
  63,011
  67,650
  72,471
  77,481
  82,689
  88,104
Debt-to-equity ratio
  0.418
  0.690
  2.830
  4.310
  5.360
  6.130
  6.690
  7.120
  7.440
  7.690
  7.890
  8.040
  8.170
  8.280
  8.360
  8.430
  8.490
  8.540
  8.590
  8.620
  8.660
  8.680
  8.710
  8.730
  8.750
  8.770
  8.780
  8.800
  8.810
  8.820
  8.830
Adjusted equity ratio
  -0.566
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -408
  -506
  -655
  -875
  -1,140
  -1,455
  -1,822
  -2,243
  -2,719
  -3,250
  -3,838
  -4,464
  -5,161
  -5,911
  -6,712
  -7,565
  -8,467
  -9,418
  -10,416
  -11,462
  -12,555
  -13,695
  -14,882
  -16,118
  -17,403
  -18,739
  -20,127
  -21,569
  -23,068
  -24,627
  -26,247
Depreciation, amort., depletion, $m
  116
  105
  136
  175
  221
  275
  338
  411
  493
  584
  685
  779
  899
  1,027
  1,165
  1,310
  1,465
  1,627
  1,798
  1,977
  2,163
  2,358
  2,561
  2,772
  2,991
  3,219
  3,456
  3,702
  3,958
  4,224
  4,501
Funds from operations, $m
  552
  -401
  -518
  -700
  -920
  -1,180
  -1,484
  -1,832
  -2,226
  -2,666
  -3,153
  -3,685
  -4,262
  -4,883
  -5,548
  -6,255
  -7,002
  -7,791
  -8,618
  -9,485
  -10,392
  -11,337
  -12,321
  -13,346
  -14,412
  -15,519
  -16,671
  -17,867
  -19,110
  -20,402
  -21,746
Change in working capital, $m
  203
  -287
  -362
  -445
  -537
  -635
  -739
  -846
  -956
  -1,066
  -1,177
  -1,286
  -1,393
  -1,499
  -1,601
  -1,702
  -1,800
  -1,896
  -1,991
  -2,085
  -2,178
  -2,271
  -2,366
  -2,462
  -2,560
  -2,661
  -2,765
  -2,873
  -2,986
  -3,104
  -3,228
Cash from operations, $m
  349
  -113
  -157
  -255
  -383
  -545
  -745
  -986
  -1,271
  -1,600
  -1,976
  -2,399
  -2,869
  -3,385
  -3,946
  -4,553
  -5,202
  -5,894
  -6,628
  -7,401
  -8,214
  -9,065
  -9,956
  -10,885
  -11,852
  -12,859
  -13,906
  -14,994
  -16,124
  -17,298
  -18,518
Maintenance CAPEX, $m
  0
  -65
  -90
  -121
  -159
  -205
  -259
  -322
  -395
  -477
  -568
  -669
  -779
  -899
  -1,027
  -1,165
  -1,310
  -1,465
  -1,627
  -1,798
  -1,977
  -2,163
  -2,358
  -2,561
  -2,772
  -2,991
  -3,219
  -3,456
  -3,702
  -3,958
  -4,224
New CAPEX, $m
  -121
  -123
  -155
  -191
  -230
  -272
  -317
  -363
  -410
  -457
  -504
  -551
  -597
  -642
  -686
  -729
  -771
  -813
  -853
  -893
  -933
  -973
  -1,014
  -1,055
  -1,097
  -1,140
  -1,185
  -1,231
  -1,280
  -1,330
  -1,383
Cash from investing activities, $m
  -169
  -188
  -245
  -312
  -389
  -477
  -576
  -685
  -805
  -934
  -1,072
  -1,220
  -1,376
  -1,541
  -1,713
  -1,894
  -2,081
  -2,278
  -2,480
  -2,691
  -2,910
  -3,136
  -3,372
  -3,616
  -3,869
  -4,131
  -4,404
  -4,687
  -4,982
  -5,288
  -5,607
Free cash flow, $m
  180
  -302
  -401
  -566
  -772
  -1,022
  -1,321
  -1,671
  -2,075
  -2,534
  -3,049
  -3,619
  -4,245
  -4,926
  -5,660
  -6,447
  -7,284
  -8,172
  -9,108
  -10,092
  -11,124
  -12,202
  -13,328
  -14,500
  -15,721
  -16,990
  -18,310
  -19,681
  -21,106
  -22,587
  -24,126
Issuance/(repayment) of debt, $m
  0
  -413
  546
  672
  811
  959
  1,115
  1,277
  1,443
  1,610
  1,777
  1,942
  2,104
  2,263
  2,418
  2,570
  2,718
  2,863
  3,006
  3,148
  3,289
  3,430
  3,572
  3,717
  3,865
  4,017
  4,175
  4,338
  4,509
  4,687
  4,874
Issuance/(repurchase) of shares, $m
  58
  1,401
  715
  949
  1,231
  1,562
  1,946
  2,385
  2,879
  3,429
  4,035
  4,680
  5,395
  6,162
  6,981
  7,851
  8,769
  9,736
  10,750
  11,812
  12,920
  14,076
  15,279
  16,531
  17,832
  19,185
  20,591
  22,051
  23,569
  25,148
  26,789
Cash from financing (excl. dividends), $m  
  60
  988
  1,261
  1,621
  2,042
  2,521
  3,061
  3,662
  4,322
  5,039
  5,812
  6,622
  7,499
  8,425
  9,399
  10,421
  11,487
  12,599
  13,756
  14,960
  16,209
  17,506
  18,851
  20,248
  21,697
  23,202
  24,766
  26,389
  28,078
  29,835
  31,663
Total cash flow (excl. dividends), $m
  240
  687
  860
  1,055
  1,269
  1,499
  1,740
  1,991
  2,247
  2,505
  2,763
  3,002
  3,253
  3,499
  3,739
  3,974
  4,203
  4,427
  4,648
  4,867
  5,085
  5,303
  5,524
  5,748
  5,977
  6,212
  6,456
  6,709
  6,972
  7,248
  7,537
Retained Cash Flow (-), $m
  -141
  -1,401
  -715
  -949
  -1,231
  -1,562
  -1,946
  -2,385
  -2,879
  -3,429
  -4,035
  -4,680
  -5,395
  -6,162
  -6,981
  -7,851
  -8,769
  -9,736
  -10,750
  -11,812
  -12,920
  -14,076
  -15,279
  -16,531
  -17,832
  -19,185
  -20,591
  -22,051
  -23,569
  -25,148
  -26,789
Prev. year cash balance distribution, $m
 
  1,997
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  1,282
  145
  106
  39
  -63
  -206
  -394
  -632
  -924
  -1,272
  -1,677
  -2,141
  -2,663
  -3,242
  -3,877
  -4,566
  -5,308
  -6,102
  -6,945
  -7,835
  -8,772
  -9,755
  -10,783
  -11,856
  -12,973
  -14,135
  -15,343
  -16,597
  -17,900
  -19,252
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  1,229
  133
  92
  32
  -49
  -149
  -266
  -395
  -531
  -667
  -797
  -914
  -1,012
  -1,088
  -1,138
  -1,160
  -1,155
  -1,124
  -1,069
  -996
  -907
  -809
  -707
  -604
  -505
  -412
  -329
  -257
  -195
  -145
Current shareholders' claim on cash, %
  100
  50.0
  35.5
  25.3
  18.1
  13.1
  9.4
  6.8
  5.0
  3.6
  2.7
  2.0
  1.5
  1.1
  0.8
  0.6
  0.4
  0.3
  0.2
  0.2
  0.1
  0.1
  0.1
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Workday, Inc. is a provider of enterprise cloud applications for finance and human resources. The Company delivers financial management, human capital management and analytics applications designed for various companies, educational institutions and government agencies. As part of its applications, the Company provides embedded analytics that capture the content and context of everyday business events, facilitating informed decision-making from wherever users are working. Its applications include Workday Financial Management, Workday Human Capital Management (HCM) and Other Applications. It also provides open, standards-based Web-services application programming interfaces, and pre-built packaged integrations and connectors. Workday Financial Management is a unified application with a range of financial capabilities, relevant analytics and metrics, and auditable process management. Workday HCM allows an organization to staff, pay, organize and develop its global workforce.

FINANCIAL RATIOS  of  Workday (WDAY)

Valuation Ratios
P/E Ratio -53.3
Price to Sales 13.9
Price to Book 17
Price to Tangible Book
Price to Cash Flow 62.3
Price to Free Cash Flow 95.4
Growth Rates
Sales Growth Rate 35%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -9.7%
Cap. Spend. - 3 Yr. Gr. Rate 9.7%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 41.8%
Total Debt to Equity 41.8%
Interest Coverage -67
Management Effectiveness
Return On Assets -13.4%
Ret/ On Assets - 3 Yr. Avg. -11.7%
Return On Total Capital -23.6%
Ret/ On T. Cap. - 3 Yr. Avg. -18.8%
Return On Equity -33.8%
Return On Equity - 3 Yr. Avg. -27%
Asset Turnover 0.5
Profitability Ratios
Gross Margin 69.2%
Gross Margin - 3 Yr. Avg. 67.8%
EBITDA Margin -18.3%
EBITDA Margin - 3 Yr. Avg. -19.4%
Operating Margin -25%
Oper. Margin - 3 Yr. Avg. -25.1%
Pre-Tax Margin -26.1%
Pre-Tax Margin - 3 Yr. Avg. -27.4%
Net Profit Margin -26%
Net Profit Margin - 3 Yr. Avg. -27.5%
Effective Tax Rate 0.2%
Eff/ Tax Rate - 3 Yr. Avg. -0.3%
Payout Ratio 0%

WDAY stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the WDAY stock intrinsic value calculation we used $1569 million for the last fiscal year's total revenue generated by Workday. The default revenue input number comes from 2017 income statement of Workday. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our WDAY stock valuation model: a) initial revenue growth rate of 37.9% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for WDAY is calculated based on our internal credit rating of Workday, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Workday.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of WDAY stock the variable cost ratio is equal to 122.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for WDAY stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Workday.

Corporate tax rate of 27% is the nominal tax rate for Workday. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the WDAY stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for WDAY are equal to 20.7%.

Life of production assets of 3.7 years is the average useful life of capital assets used in Workday operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for WDAY is equal to -48.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1277 million for Workday - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 205.368 million for Workday is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Workday at the current share price and the inputted number of shares is $22.0 billion.

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COMPANY NEWS

▶ Check Out These 5 Top Tech Stocks Near Buy Points   [Oct-16-17 08:04AM  Investor's Business Daily]
▶ [$$] How Google Can Play Catch-Up in the Cloud   [Oct-13-17 11:40PM  Barrons.com]
▶ [$$] Workday Gets a Late Upgrade   [Oct-12-17 01:40PM  Barrons.com]
▶ Will Workday Analyst Day Provide A Pop? Here's What To Expect   [Oct-09-17 04:10PM  Investor's Business Daily]
▶ Stocks With Rising Relative Price Strength: Workday   [Sep-29-17 03:00AM  Investor's Business Daily]
▶ Cheap Stocks In The Software/IT Services Sector   [Sep-22-17 12:06PM  Barrons.com]
▶ Workday Announces Workday Rising 2017   [Sep-19-17 08:30AM  Marketwired]
▶ ETFs with exposure to Workday, Inc. : September 18, 2017   [Sep-18-17 06:59PM  Capital Cube]
▶ ETFs with exposure to Workday, Inc. : September 7, 2017   [Sep-07-17 02:08PM  Capital Cube]
▶ Workday Announces Financial Analyst Day   [Sep-06-17 04:02PM  Marketwired]
▶ Another Way To Value Software Stocks   [10:37AM  Barrons.com]
▶ Workday reports 2Q loss   [08:04PM  Associated Press]
▶ The Blitz: Soup to nuts   [01:37PM  CNBC Videos]
▶ Workday: Cramer's Top Takeaways   [06:42AM  TheStreet.com]
▶ [$$] Workdays Very High Bar   [12:54AM  The Wall Street Journal]
▶ [$$] Workday's Very High Bar   [06:01PM  The Wall Street Journal]
▶ Workday Smashes Quarterly Estimates On Top And Bottom Line   [04:18PM  Investor's Business Daily]
▶ Workday beats the Street   [04:09PM  CNBC Videos]
▶ Here's What To Expect When Workday, Box Report Earnings   [Aug-29-17 04:05PM  Investor's Business Daily]
▶ Preparing For Workday's Q2 Results   [Aug-27-17 03:56PM  Benzinga]
▶ [$$] Three Stocks to Gain From ADP Disruption   [Aug-22-17 11:06AM  Barrons.com]
▶ ETFs with exposure to Workday, Inc. : July 25, 2017   [Jul-25-17 02:09PM  Capital Cube]
Financial statements of WDAY
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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