) is set to report fiscal second quarter 2014 results after the
closing bell on Aug 27, 2013. Last quarter, it posted a 13.0%
positive surprise with a trailing four-quarter average negative
surprise of 16.5%. Let's see how things are shaping up for this
Growth Factors this Past Quarter
Workday's first quarter revenue growth was mostly driven by
strength across all the segments, particularly Subscription.
Subscription revenues surged 85.3% year over year, whereas
Professional revenues increased 16.7% year over year to $23.2
million. The company ended the first quarter with more than 450
customers in total, of which 290 are live on Workday
However, operating expenses rose sharply to $87.6 million from
$51.7 million reported in the year-ago quarter due to a 113.2%
increase in general & administrative expense, 74.6% rise in
research & development expense and a 54.5% jump in sales
& marketing expense. Net loss (including stock-based
compensation) was $33.0 million compared with $20.0 million loss
in the year-ago quarter.
Our proven model does not conclusively show that Workday will
beat earnings estimates this quarter. That is because a stock
needs to have both a positive Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank #1, #2 or #3 for this to happen. That is not
the case here as you will see below.
Negative Zacks ESP:
That is because the Most Accurate estimate stands at 25 cents
loss per share while the Zacks Consensus Estimate is at 24 cents
loss per share. That is a difference of -4.17%.
Zacks Rank #3 (Hold):
Workday has a Zacks Rank #3 (Hold). The Zacks Rank #3 when
combined with a negative ESP makes surprise prediction difficult.
But we caution against stocks with Zacks Ranks #4 and #5 (Sell
rated stocks) going into the earnings announcement, especially
when the company is seeing negative estimate revisions
Other Stocks to Consider
Investors can consider other stocks with a positive ESP and a
favorable Zacks Rank including:
), with Earnings ESP of +66.7% and Zacks Rank #1 (Strong Buy)
Fuel System Sol.
), with Earnings ESP of +25.0% and Zacks Rank #1 (Strong Buy)
), with Earnings ESP of +1.9% and Zacks Rank #2 (Buy)
FUEL SYSTEM SOL (FSYS): Free Stock Analysis
INGRAM MICRO (IM): Free Stock Analysis Report
INTELIQUENT INC (IQNT): Free Stock Analysis
WORKDAY INC-A (WDAY): Free Stock Analysis
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