Intrinsic value of Workday - WDAY

Previous Close

$101.47

  Intrinsic Value

$2.81

stock screener

  Rating & Target

str. sell

-97%

Previous close

$101.47

 
Intrinsic value

$2.81

 
Up/down potential

-97%

 
Rating

str. sell

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 21.1

 

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
  40.40
  36.86
  33.67
  30.81
  28.23
  25.90
  23.81
  21.93
  20.24
  18.71
  17.34
  16.11
  15.00
  14.00
  13.10
  12.29
  11.56
  10.90
  10.31
  9.78
  9.30
  8.87
  8.49
  8.14
  7.82
  7.54
  7.29
  7.06
  6.85
  6.67
Revenue, $m
  1,569
  2,203
  3,015
  4,030
  5,272
  6,760
  8,511
  10,537
  12,848
  15,448
  18,339
  21,520
  24,987
  28,734
  32,757
  37,047
  41,600
  46,409
  51,469
  56,777
  62,331
  68,130
  74,176
  80,470
  87,018
  93,827
  100,902
  108,255
  115,897
  123,838
  132,095
Variable operating expenses, $m
 
  2,699
  3,688
  4,924
  6,436
  8,248
  10,381
  12,849
  15,664
  18,831
  22,352
  26,210
  30,432
  34,996
  39,895
  45,121
  50,666
  56,522
  62,685
  69,150
  75,915
  82,978
  90,341
  98,007
  105,982
  114,274
  122,892
  131,847
  141,154
  150,827
  160,883
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
  2,699
  3,688
  4,924
  6,436
  8,248
  10,381
  12,849
  15,664
  18,831
  22,352
  26,210
  30,432
  34,996
  39,895
  45,121
  50,666
  56,522
  62,685
  69,150
  75,915
  82,978
  90,341
  98,007
  105,982
  114,274
  122,892
  131,847
  141,154
  150,827
  160,883
Operating income, $m
  -392
  -496
  -673
  -894
  -1,165
  -1,489
  -1,870
  -2,312
  -2,816
  -3,382
  -4,013
  -4,690
  -5,445
  -6,262
  -7,139
  -8,074
  -9,066
  -10,114
  -11,217
  -12,373
  -13,584
  -14,848
  -16,165
  -17,537
  -18,964
  -20,448
  -21,990
  -23,592
  -25,257
  -26,988
  -28,788
EBITDA, $m
  -276
  -389
  -532
  -711
  -931
  -1,193
  -1,502
  -1,860
  -2,268
  -2,727
  -3,237
  -3,799
  -4,411
  -5,072
  -5,783
  -6,540
  -7,344
  -8,193
  -9,086
  -10,023
  -11,003
  -12,027
  -13,094
  -14,205
  -15,361
  -16,563
  -17,812
  -19,110
  -20,459
  -21,861
  -23,319
Interest expense (income), $m
  6
  19
  5
  26
  52
  84
  122
  166
  218
  277
  343
  417
  498
  587
  682
  785
  895
  1,011
  1,134
  1,263
  1,398
  1,540
  1,688
  1,842
  2,003
  2,170
  2,344
  2,525
  2,712
  2,907
  3,110
Earnings before tax, $m
  -409
  -515
  -678
  -920
  -1,217
  -1,572
  -1,992
  -2,478
  -3,034
  -3,659
  -4,356
  -5,107
  -5,944
  -6,849
  -7,821
  -8,859
  -9,961
  -11,125
  -12,350
  -13,636
  -14,982
  -16,388
  -17,853
  -19,379
  -20,967
  -22,618
  -24,334
  -26,117
  -27,970
  -29,896
  -31,898
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
  -515
  -678
  -920
  -1,217
  -1,572
  -1,992
  -2,478
  -3,034
  -3,659
  -4,356
  -5,107
  -5,944
  -6,849
  -7,821
  -8,859
  -9,961
  -11,125
  -12,350
  -13,636
  -14,982
  -16,388
  -17,853
  -19,379
  -20,967
  -22,618
  -24,334
  -26,117
  -27,970
  -29,896
  -31,898

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
  1,785
  2,443
  3,266
  4,272
  5,478
  6,897
  8,539
  10,412
  12,519
  14,862
  17,439
  20,249
  23,286
  26,545
  30,022
  33,711
  37,608
  41,709
  46,011
  50,511
  55,211
  60,110
  65,211
  70,517
  76,034
  81,769
  87,727
  93,919
  100,355
  107,046
Adjusted assets (=assets-cash), $m
  1,271
  1,785
  2,443
  3,266
  4,272
  5,478
  6,897
  8,539
  10,412
  12,519
  14,862
  17,439
  20,249
  23,286
  26,545
  30,022
  33,711
  37,608
  41,709
  46,011
  50,511
  55,211
  60,110
  65,211
  70,517
  76,034
  81,769
  87,727
  93,919
  100,355
  107,046
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
  456
  624
  834
  1,091
  1,399
  1,762
  2,181
  2,660
  3,198
  3,796
  4,455
  5,172
  5,948
  6,781
  7,669
  8,611
  9,607
  10,654
  11,753
  12,903
  14,103
  15,354
  16,657
  18,013
  19,422
  20,887
  22,409
  23,991
  25,635
  27,344
Working capital, $m
  1,239
  -1,064
  -1,456
  -1,947
  -2,546
  -3,265
  -4,111
  -5,089
  -6,206
  -7,462
  -8,858
  -10,394
  -12,069
  -13,879
  -15,821
  -17,894
  -20,093
  -22,415
  -24,859
  -27,423
  -30,106
  -32,907
  -35,827
  -38,867
  -42,030
  -45,318
  -48,736
  -52,287
  -55,978
  -59,814
  -63,802
Total debt, $m
  534
  150
  742
  1,482
  2,388
  3,473
  4,750
  6,228
  7,914
  9,810
  11,919
  14,238
  16,767
  19,500
  22,434
  25,563
  28,883
  32,390
  36,081
  39,952
  44,003
  48,233
  52,642
  57,233
  62,009
  66,974
  72,135
  77,497
  83,070
  88,863
  94,885
Total liabilities, $m
  1,992
  1,607
  2,199
  2,939
  3,845
  4,930
  6,207
  7,685
  9,371
  11,267
  13,376
  15,695
  18,224
  20,957
  23,891
  27,020
  30,340
  33,847
  37,538
  41,409
  45,460
  49,690
  54,099
  58,690
  63,466
  68,431
  73,592
  78,954
  84,527
  90,320
  96,342
Total equity, $m
  1,277
  179
  244
  327
  427
  548
  690
  854
  1,041
  1,252
  1,486
  1,744
  2,025
  2,329
  2,655
  3,002
  3,371
  3,761
  4,171
  4,601
  5,051
  5,521
  6,011
  6,521
  7,052
  7,603
  8,177
  8,773
  9,392
  10,036
  10,705
Total liabilities and equity, $m
  3,269
  1,786
  2,443
  3,266
  4,272
  5,478
  6,897
  8,539
  10,412
  12,519
  14,862
  17,439
  20,249
  23,286
  26,546
  30,022
  33,711
  37,608
  41,709
  46,010
  50,511
  55,211
  60,110
  65,211
  70,518
  76,034
  81,769
  87,727
  93,919
  100,356
  107,047
Debt-to-equity ratio
  0.418
  0.840
  3.040
  4.540
  5.590
  6.340
  6.890
  7.290
  7.600
  7.840
  8.020
  8.160
  8.280
  8.370
  8.450
  8.510
  8.570
  8.610
  8.650
  8.680
  8.710
  8.740
  8.760
  8.780
  8.790
  8.810
  8.820
  8.830
  8.840
  8.850
  8.860
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
  -515
  -678
  -920
  -1,217
  -1,572
  -1,992
  -2,478
  -3,034
  -3,659
  -4,356
  -5,107
  -5,944
  -6,849
  -7,821
  -8,859
  -9,961
  -11,125
  -12,350
  -13,636
  -14,982
  -16,388
  -17,853
  -19,379
  -20,967
  -22,618
  -24,334
  -26,117
  -27,970
  -29,896
  -31,898
Depreciation, amort., depletion, $m
  116
  107
  141
  183
  234
  296
  368
  452
  548
  655
  775
  891
  1,034
  1,190
  1,356
  1,534
  1,722
  1,921
  2,131
  2,351
  2,581
  2,821
  3,071
  3,331
  3,603
  3,884
  4,177
  4,482
  4,798
  5,127
  5,469
Funds from operations, $m
  552
  -408
  -537
  -737
  -982
  -1,277
  -1,624
  -2,026
  -2,486
  -3,004
  -3,581
  -4,216
  -4,909
  -5,659
  -6,465
  -7,325
  -8,238
  -9,203
  -10,219
  -11,286
  -12,402
  -13,567
  -14,782
  -16,048
  -17,365
  -18,733
  -20,156
  -21,635
  -23,172
  -24,769
  -26,429
Change in working capital, $m
  203
  -306
  -392
  -490
  -600
  -719
  -846
  -979
  -1,116
  -1,256
  -1,396
  -1,536
  -1,674
  -1,810
  -1,943
  -2,072
  -2,199
  -2,323
  -2,444
  -2,564
  -2,683
  -2,801
  -2,920
  -3,040
  -3,163
  -3,288
  -3,418
  -3,551
  -3,691
  -3,836
  -3,988
Cash from operations, $m
  349
  -101
  -145
  -247
  -383
  -558
  -778
  -1,048
  -1,370
  -1,748
  -2,184
  -2,680
  -3,235
  -3,849
  -4,522
  -5,253
  -6,039
  -6,881
  -7,775
  -8,722
  -9,719
  -10,766
  -11,862
  -13,008
  -14,202
  -15,445
  -16,739
  -18,084
  -19,481
  -20,933
  -22,441
Maintenance CAPEX, $m
  0
  -65
  -91
  -125
  -167
  -218
  -280
  -352
  -436
  -532
  -640
  -759
  -891
  -1,034
  -1,190
  -1,356
  -1,534
  -1,722
  -1,921
  -2,131
  -2,351
  -2,581
  -2,821
  -3,071
  -3,331
  -3,603
  -3,884
  -4,177
  -4,482
  -4,798
  -5,127
New CAPEX, $m
  -228
  -131
  -168
  -210
  -257
  -308
  -362
  -420
  -478
  -538
  -598
  -658
  -718
  -776
  -833
  -888
  -942
  -995
  -1,047
  -1,099
  -1,150
  -1,200
  -1,251
  -1,303
  -1,355
  -1,409
  -1,465
  -1,522
  -1,582
  -1,644
  -1,709
Cash from investing activities, $m
  -169
  -196
  -259
  -335
  -424
  -526
  -642
  -772
  -914
  -1,070
  -1,238
  -1,417
  -1,609
  -1,810
  -2,023
  -2,244
  -2,476
  -2,717
  -2,968
  -3,230
  -3,501
  -3,781
  -4,072
  -4,374
  -4,686
  -5,012
  -5,349
  -5,699
  -6,064
  -6,442
  -6,836
Free cash flow, $m
  180
  -298
  -405
  -582
  -807
  -1,084
  -1,420
  -1,819
  -2,284
  -2,818
  -3,422
  -4,097
  -4,843
  -5,659
  -6,544
  -7,497
  -8,516
  -9,598
  -10,744
  -11,951
  -13,219
  -14,547
  -15,934
  -17,381
  -18,889
  -20,457
  -22,088
  -23,783
  -25,544
  -27,375
  -29,277
Issuance/(repayment) of debt, $m
  0
  -384
  592
  740
  905
  1,085
  1,277
  1,478
  1,685
  1,896
  2,109
  2,320
  2,528
  2,733
  2,934
  3,129
  3,320
  3,507
  3,691
  3,871
  4,051
  4,230
  4,409
  4,591
  4,776
  4,965
  5,161
  5,363
  5,573
  5,792
  6,022
Issuance/(repurchase) of shares, $m
  58
  1,413
  744
  1,002
  1,317
  1,693
  2,134
  2,643
  3,221
  3,870
  4,590
  5,365
  6,225
  7,153
  8,147
  9,207
  10,329
  11,514
  12,760
  14,066
  15,432
  16,858
  18,343
  19,889
  21,498
  23,170
  24,907
  26,713
  28,589
  30,539
  32,567
Cash from financing (excl. dividends), $m  
  60
  1,029
  1,336
  1,742
  2,222
  2,778
  3,411
  4,121
  4,906
  5,766
  6,699
  7,685
  8,753
  9,886
  11,081
  12,336
  13,649
  15,021
  16,451
  17,937
  19,483
  21,088
  22,752
  24,480
  26,274
  28,135
  30,068
  32,076
  34,162
  36,331
  38,589
Total cash flow (excl. dividends), $m
  240
  731
  932
  1,161
  1,416
  1,694
  1,990
  2,301
  2,622
  2,948
  3,276
  3,587
  3,910
  4,226
  4,536
  4,839
  5,134
  5,423
  5,707
  5,986
  6,264
  6,540
  6,818
  7,099
  7,385
  7,678
  7,980
  8,292
  8,618
  8,957
  9,312
Retained Cash Flow (-), $m
  -141
  -1,413
  -744
  -1,002
  -1,317
  -1,693
  -2,134
  -2,643
  -3,221
  -3,870
  -4,590
  -5,365
  -6,225
  -7,153
  -8,147
  -9,207
  -10,329
  -11,514
  -12,760
  -14,066
  -15,432
  -16,858
  -18,343
  -19,889
  -21,498
  -23,170
  -24,907
  -26,713
  -28,589
  -30,539
  -32,567
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
 
  1,315
  188
  158
  99
  1
  -143
  -341
  -599
  -922
  -1,314
  -1,778
  -2,315
  -2,926
  -3,611
  -4,368
  -5,195
  -6,091
  -7,054
  -8,080
  -9,169
  -10,318
  -11,525
  -12,791
  -14,113
  -15,492
  -16,927
  -18,420
  -19,971
  -21,582
  -23,255
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
 
  1,261
  172
  138
  81
  1
  -104
  -231
  -374
  -530
  -689
  -844
  -988
  -1,113
  -1,212
  -1,282
  -1,320
  -1,325
  -1,299
  -1,244
  -1,165
  -1,067
  -956
  -838
  -719
  -603
  -494
  -395
  -309
  -236
  -175
Current shareholders' claim on cash, %
  100
  50.0
  35.3
  25.0
  17.8
  12.8
  9.2
  6.6
  4.8
  3.5
  2.6
  1.9
  1.4
  1.0
  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 -50.5
Price to Sales 13.1
Price to Book 16.1
Price to Tangible Book
Price to Cash Flow 59
Price to Free Cash Flow 170.2
Growth Rates
Sales Growth Rate 35%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 70.1%
Cap. Spend. - 3 Yr. Gr. Rate 24.6%
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 40.4% 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 207.996 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 $21.1 billion.

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COMPANY NEWS

▶ How Workday Inc Stock Can Rocket Back to Its All-Time Highs   [Dec-12-17 03:18PM  InvestorPlace]
▶ IBD Rating Upgrades: Workday Flashes Improved Price Strength   [Dec-08-17 03:00AM  Investor's Business Daily]
▶ ETFs with exposure to Workday, Inc. : December 5, 2017   [Dec-05-17 01:26PM  Capital Cube]
▶ Workday Stock Fell despite Earnings Beat   [Dec-04-17 02:13PM  Market Realist]
▶ Why Paycom Software Is in a League of Its Own   [Dec-03-17 12:00PM  Motley Fool]
▶ 5 Analyst Takes On Workday's Earnings   [Nov-30-17 03:39PM  Benzinga]
▶ Workday Inc (WDAY) Dips Despite Earnings Beat   [Nov-29-17 06:01PM  InvestorPlace]
▶ Workday Earnings Blow Past Estimates   [05:12PM  Investor's Business Daily]
▶ Workday reports 3Q loss   [04:11PM  Associated Press]
▶ Workday beats the Street   [04:11PM  CNBC Videos]
▶ Workday stock rises after earnings   [04:09PM  MarketWatch]
▶ JPMorgan Lists Favorite AI Picks   [03:54PM  Investopedia]
▶ 5 Companies That Microsoft Could Put on Its Shopping List   [Nov-25-17 05:20PM  TheStreet.com]
▶ Square shares jump on news of Bitcoin venture   [Nov-15-17 01:29PM  Yahoo Finance Video]
▶ What Do Amazon, Netflix, BofA See In This Potential Breakout Stock?   [Nov-10-17 04:11PM  Investor's Business Daily]
▶ Workday Announces Workday Rising Europe 2017   [Nov-07-17 08:30AM  Marketwired]
▶ (ADP) Who are ADP's Main Competitors?   [Nov-01-17 10:48AM  Investopedia]
▶ 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]
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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