Value
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 3.0 |
| P/S | 7.0 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 7.8 |
| PEG | 8.7 |
| Analyst target | 4.0 |
- ▸Forward P/E: 15.7x
- ▸PEG: 0.72
WDAY · Why this verdict
Why Workday (WDAY) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.8/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Workday has beaten earnings estimates in all 4 of the last 4 quarters with an average 8.2% positive surprise, generates free cash flow at 368% of net income, and passes the Rule of 40 at a score of 45, but is currently in a confirmed price downtrend with the 200-day moving average declining at -7.4% per month and 15% short interest.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Workday converts earnings into free cash flow at 368% of net income and passes the Rule of 40 at a score of 45, meaning the combined revenue growth and operating margin exceeds 40%, reflecting a high-quality enterprise software business model with durable cash generation. Quality breakdown | Rule of 40 score remains above 40 and free cash flow stays above 200% of net income over the next 12 months. | ↑Improving |
| CounterThe Rule of 40 score of 45 and FCF conversion of 368% may reflect temporary tailwinds from deferred revenue recognition or working capital timing; if revenue growth slows, the Rule of 40 score will compress. | ||
Short interest of 15% of the float is elevated for a high-quality enterprise software company, suggesting that sophisticated market participants hold meaningful bearish views on revenue growth sustainability or competitive positioning despite the strong earnings track record. Key risks | Short interest declines below 10% within 12 months as positive earnings momentum reduces the short thesis. | →Stable |
| CounterHigh short interest in a falling stock that is beaten earnings consistently creates short-squeeze risk; the combination of strong earnings and high short interest means positive news catalysts could produce outsized positive price moves. | ||
Workday has beaten EPS consensus in all 4 of the last 4 quarters with an average positive surprise of 8.2%, including beats of 5.7%, 6.4%, 6.7%, and 13.8%, demonstrating consistently above-expectation execution in its enterprise cloud software business. Earnings | Earnings beat streak extends to 6 consecutive quarters and average EPS surprise remains above 5%. | ↓Deteriorating |
| CounterLarge software companies often manage guidance conservatively to ensure predictable beats; the consistent beat pattern may reflect guidance management rather than genuinely surprising business performance. | ||
The stock is in a confirmed death cross with the 200-day moving average declining at -7.4% per month, on-balance-volume falling, and volume distribution showing selling pressure, creating a significant technical headwind despite the strong earnings fundamentals. Momentum breakdown | Price rises above the 200-day moving average and a golden cross forms within 12 months as the fundamental quality attracts buyers. | ↑Improving |
| CounterThe stock sits at the extreme low end of its 52-week range, which historically creates mean reversion opportunities in high-quality software companies with strong earnings momentum. | ||
Workday converts earnings into free cash flow at 368% of net income and passes the Rule of 40 at a score of 45, meaning the combined revenue growth and operating margin exceeds 40%, reflecting a high-quality enterprise software business model with durable cash generation.
↑ImprovingQuality breakdown
- Expectation
- Rule of 40 score remains above 40 and free cash flow stays above 200% of net income over the next 12 months.
CounterThe Rule of 40 score of 45 and FCF conversion of 368% may reflect temporary tailwinds from deferred revenue recognition or working capital timing; if revenue growth slows, the Rule of 40 score will compress.
Short interest of 15% of the float is elevated for a high-quality enterprise software company, suggesting that sophisticated market participants hold meaningful bearish views on revenue growth sustainability or competitive positioning despite the strong earnings track record.
→StableKey risks
- Expectation
- Short interest declines below 10% within 12 months as positive earnings momentum reduces the short thesis.
CounterHigh short interest in a falling stock that is beaten earnings consistently creates short-squeeze risk; the combination of strong earnings and high short interest means positive news catalysts could produce outsized positive price moves.
Workday has beaten EPS consensus in all 4 of the last 4 quarters with an average positive surprise of 8.2%, including beats of 5.7%, 6.4%, 6.7%, and 13.8%, demonstrating consistently above-expectation execution in its enterprise cloud software business.
↓DeterioratingEarnings
- Expectation
- Earnings beat streak extends to 6 consecutive quarters and average EPS surprise remains above 5%.
CounterLarge software companies often manage guidance conservatively to ensure predictable beats; the consistent beat pattern may reflect guidance management rather than genuinely surprising business performance.
The stock is in a confirmed death cross with the 200-day moving average declining at -7.4% per month, on-balance-volume falling, and volume distribution showing selling pressure, creating a significant technical headwind despite the strong earnings fundamentals.
↑ImprovingMomentum breakdown
- Expectation
- Price rises above the 200-day moving average and a golden cross forms within 12 months as the fundamental quality attracts buyers.
CounterThe stock sits at the extreme low end of its 52-week range, which historically creates mean reversion opportunities in high-quality software companies with strong earnings momentum.
Per-dimension breakdown
Quality
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 5.3 |
| ROA | 3.0 |
| Gross margin | 10.0 |
| Op margin | 4.7 |
| Net margin | 6.2 |
| Current ratio | 3.6 |
| FCF quality | 10.0 |
| Moat | 7.6 |
| Rule of 40 | 7.3 |
| Piotroski F | 8.9 |
- ▸Excellent cash conversion: 244% FCF/NI
- ▸Wide economic moat
- ▸Compounder quality: strong returns + growth
- ▸Rule of 40: 43 (pass)
Growth
7.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.7 |
| EPS growth | 10.0 |
Momentum
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 8.0 |
| Volume | 0.7 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 4.2 |
| Analyst rating | 7.5 |
| Price target | 5.0 |
Insider
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 3.0 |
| insider conviction | 2.0 |
| holder change | 7.3 |
| notable moves | 7.0 |
- ▸Notable insider selling — $98,869,193 (0.198% of mkt cap)
Peer rank
4.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.6 |
| quality rank | 6.2 |
| growth rank | 4.6 |
Technical
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.5 |
| support resistance | 3.8 |
| 52w position | 6.6 |
| gap | 5.0 |
Risk (lower is worse)
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 4.1 |
| days to cover | 6.7 |
| volatility | 2.1 |
| put call | 4.1 |
| implied vol | 2.8 |
| max pain risk | 7.0 |
| beta | 6.8 |
| debt equity | 7.5 |
- ▸High IV: 63%
Catalyst
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 3.5 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 5.5 |
| news activity | 8.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:4.8>=4.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:88d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.5=NEGATIVE
Warning (1)
- MOMENTUM:4.8<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
-0.53
Upside
-7.9%
Downside
15.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.0 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Growth at 7.8) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.5=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.53 — supplementary context, not the trigger for this path.
The strongest dimensions are Growth at 7.8, Quality at 6.7, and Catalyst at 6.4; the weakest are Technical at 4.2, Peer rank at 4.4, and Insider at 4.8. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -0.53 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Perfect Earnings Execution High Surprise
Trip ifEPS surprise falls below 0% in at least 2 of the next 4 quarters, breaking the perfect beat streak.
- P2Exceptional Free Cash Flow Rule Of 40
Trip ifRule of 40 score falls below 35, indicating both growth and margins are deteriorating simultaneously.
- P3Confirmed Price Downtrend 7 Percent Slope
Trip ifPrice drops below $110, more than 15% below the current $129.60, confirming the downtrend is accelerating.
- P4High Short Interest 15 Percent
Trip ifShort interest rises above 20%, exceeding the current 15% and indicating broadening bearish conviction.