Updated to correct consensus revenue estimate for the quarter ended January.

Software vendor Workday (WDAY - Get Report) will report fourth-quarter earnings results after the closing bell Monday. Here's why you should consider buying.

Workday shares, at $59, have been under pressure, falling 27% year to date against a 5% decline for in the S&P 500 (SPX) index. The shares have lost 37% of their value in the past 52 weeks, prompting some to consider Workday one of the worst stocks in the world.

The reason for Workday's decline, aside from market volatility, is investors are spooked about cloud software stocks with high valuation multiples. The poor business outlook issued earlier this month by Tableau Software (DATA)  started the ball rolling. But Workday -- with an earnings beat and upbeat guidance Monday -- can turn sentiment back in its favor.

For the quarter that ended January, analysts, on average, expect Workday to post a loss of 4 cents a share on revenue of $319.63 million, compared to the year-ago quarter when the company's loss was 6 cents a share on revenue of $226.27 million. For the full year, the loss is expected to be 5 cents a share, narrowing from 33 cents a share in the year-ago quarter, while revenue of $1.16 billion would mark an increase of 47% from the year-ago quarter.

With better-than-expected results released by cloud giant Salesforce.com (CRM - Get Report) , competition for fast-growing markets like the cloud and Big Data has grown more fierce. Workday, having beaten Wall Street's earnings in three straight quarters, has carved a solid niche for itself in the realm of cloud human resources and financials.

Workday has offered its customers more flexible payment terms, which seems to be working. The company is now on pace to grow full-year revenue by 47%, which would be seven percentage points higher than its guidance. So consider buying now ahead of earnings.

 

 

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.