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Workday Needs a Day Off

To that end, disregarding profits for a "grow at all cost" mentality may one day prove to be a regrettable decision. It has made fools out of a lot of investors. I'm not suggesting that Workday will go belly-up next month. But the excitement, in my opinion, is a bit exaggerated. I make no apologies for raising valuation concerns on any company absent the necessary profits to support the stock price.

This is not a situation where I'm just being overly critical on Workday. From my vantage point, there are much better value plays out there, and with stronger profitability. Although management has talked down the company's head-to-head battle with NetSuite (N) in the financial and ERP (enterprise resource planning) markets, I believe NetSuite presents the better value, especially given that NetSuite has begun to differentiate in to other end-markets.

Another issue that is worth considering is how well Workday management can deal with the company's level of growth.

Yes, it's a great problem to have. But it also introduces many more complexities for which management may be unprepared, such as demands on new technology, workforce and, let's not forget, operational cash flow.

So far, the company is handling the situation well. But as noted, for the price the Street is willing to pay for this growth, there is no margin for error. It would serve the stock well if it were to take a couple of days off.

At the time of publication, the author held no position in any of the stocks mentioned.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Stock quotes in this article: WDAY, CRM, ORCL, IBM, N, SAP 
Richard Saintvilus is a co-founder of StockSaints.com where he serves as CEO and editor-in-chief. After 20 years in the IT industry, including 5 years as a high school computer teacher, Saintvilus decided his second act would be as a stock analyst - bringing logic from an investor's point of view. His goal is to remove the complicated aspect of investing and present it to readers in a way that makes sense.

His background in engineering has provided him with strong analytical skills. That, along with 15 years of trading and investing, has given him the tools needed to assess equities and appraise value. Richard is a Warren Buffett disciple who bases investment decisions on the quality of a company's management, growth aspects, return on equity, and price-to-earnings ratio.

His work has been featured on CNBC, Yahoo! Finance, MSN Money, Forbes, Motley Fool and numerous other outlets.

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