Workday (WDAY) Roof Leaking Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Workday ( WDAY) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Workday as such a stock due to the following factors:

  • WDAY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $143.2 million.
  • WDAY has traded 1.2 million shares today.
  • WDAY is trading at 2.05 times the normal volume for the stock at this time of day.
  • WDAY crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in WDAY with the Ticky from Trade-Ideas. See the FREE profile for WDAY NOW at Trade-Ideas

More details on WDAY:

Workday, Inc. provides enterprise cloud applications for global human resources and finance in the United States and internationally. It offers applications for customers to manage critical business functions that enable them to optimize their financial and human capital resources. Currently there are 11 analysts that rate Workday a buy, no analysts rate it a sell, and 11 rate it a hold.

The average volume for Workday has been 1.5 million shares per day over the past 30 days. Workday has a market cap of $9.2 billion and is part of the technology sector and computer software & services industry. Shares are up 9.8% year-to-date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Workday as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Software industry. The net income has significantly decreased by 92.4% when compared to the same quarter one year ago, falling from -$35.98 million to -$69.22 million.
  • WORKDAY INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, WORKDAY INC reported poor results of -$1.00 versus -$0.45 in the prior year. This year, the market expects an improvement in earnings (-$0.43 versus -$1.00).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Software industry and the overall market, WORKDAY INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite currently having a low debt-to-equity ratio of 0.43, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 3.93 is very high and demonstrates very strong liquidity.
  • Net operating cash flow has increased to -$9.01 million or 30.23% when compared to the same quarter last year. Despite an increase in cash flow, WORKDAY INC's cash flow growth rate is still lower than the industry average growth rate of 41.66%.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

null

More from Markets

U.S. Crude Oil Hits Fresh 3-Year Highs as Gasoline Heads to $3 a Gallon

U.S. Crude Oil Hits Fresh 3-Year Highs as Gasoline Heads to $3 a Gallon

Stocks Waver Amid Progress on U.S.-China Trade; Dow Slips

Stocks Waver Amid Progress on U.S.-China Trade; Dow Slips

Jim Cramer: Schlumberger Predicted the Rise in Oil Prices

Jim Cramer: Schlumberger Predicted the Rise in Oil Prices

Jim Cramer on Zillow's New Business: Buying and Selling Homes

Jim Cramer on Zillow's New Business: Buying and Selling Homes

Jim Cramer on the Markets: It's Natural to Have Some Profit Taking

Jim Cramer on the Markets: It's Natural to Have Some Profit Taking