Workday Inc. [NASDAQ: WDAY]: The global equity markets continue to trend downwards, and bond yields in the U.S are hitting new lows. It’s an indicator that investors are taking a cautious approach to the markets, due to the increased uncertainty in the global markets. In spite of this, WDAY is going strong, and the chart has been on a steady uptrend. This follows the release of Q1 results after Tuesday’s close, and the numbers look good.
The company reported roughly 33% (yoy) increase in revenues, hitting about $825 million in the last quarter. Both subscription and professional services revenues grew significantly by 34% and 29% respectively. The company also announced that its revenues outside the U.S are getting stronger, and pushed up by about 42% in the last quarter. They now account for roughly 24% of all of WDAY’s total revenues. The company expects revenues to get stronger all through the year. It has raised its revenue estimates from a ballpark of $3.045 billion to $3.06 billion for the entire financial year. This is possible because, the company continues to draw in high level clients. As per its earnings transcript, WDAY added Carl Zeiss, Procter & Gamble, and Cisco in its list of Human Capital Management (HCM) platform customers. Other additions to its client list include E*Trade, Aurora health, and a major insurance company who are now clients for WDAYs platform. It’s a positive indicator that WDAY is in solid ground to keep delivering strong results, in spite of the growing uncertainty in the equity markets.
Looking at the charts, WDAY has been trending upwards and it broke-out (bullish move) of a new 52 week high yesterday. However, WDAY did pullback from its intra-day highs yesterday of $217.63 and closed at $212.87.
The stock seems it has the potential in the near term to form another bullish breakout on the one day chart. Each time the stock has broken out of new highs this year it has previously consolidated so look for the chart to perhaps consolidate again prior to another big move. With that being said, the trigger to such a breakout again could be the strong Q1 results that were announced after markets close yesterday. A breakout above the prior resistance again at $213.98 could trigger WDAY to test its 52 week high of $217.63. On the downside the short term support is around $202 to $206 however the key support is the 50 day moving average at $197.41 on chart.
Besides, the bullish Q1 results, there are other fundamental factors that support WDAY’s upside momentum. The company’s revenue in the period was $825.1 million, up from $618.6 million a year ago and ahead of forecasts of about $814.2 million. WDAY subscription revenue in the period was $701 million, up 34.3% from a year ago. With these types of numbers, it’s not surprising that WDAY has outperformed the S&P 500 in the last 52-weeks. In this period, it has gained by roughly 59.90% while the S&P 500 has returned 3.75%. This may explain why some analysts have a positive outlook for this stock.
However, remember it always come down to the chart and how the chart reads. Some companies may have great news and great earnings but that doesn’t always mean the chart is bullish or the stock is going to make its next big move.