Workday, Inc. (WDAY) Stock Valuation — DCF Analysis
Software - Application · NASDAQ
Current Price
$130.80
Intrinsic Value
$187.37
+30.2% margin of safety
COMPETITIVE MOAT
↑Deep Integration & Switching Costs
Workday's cloud-native platform deeply embeds HR and finance processes. This creates significant switching costs for enterprises, making it difficult and expensive to migrate away.
↑AI Agent Ecosystem Development
New tools for developers to build and verify AI agents on Workday, coupled with Agent Passport for monitoring, foster a proprietary ecosystem. This enhances platform stickiness and innovation.
↑Governed Data Cloud Access
Integration with AWS for zero-copy, bi-directional access to Workday's governed HR and finance data empowers developers. This unlocks advanced AI and analytics capabilities within their ecosystem.
INVESTMENT RISKS
↓Intense Competition
The enterprise software market is highly competitive, with established players and emerging startups vying for market share. Workday faces pressure from both sides.
↓AI Development Pace
While Workday is investing in AI, the rapid evolution of AI technology means they must constantly innovate to stay ahead. Falling behind could erode their competitive edge.
↓Data Security & Privacy
Handling sensitive HR and finance data necessitates robust security and privacy measures. Any breaches or compliance failures could severely damage trust and reputation.
Base case
WDAY base case valuation
A base case discounted cash flow model for WDAY estimates an intrinsic value of about $187.37 per share, against a current price of $130.8. The model assumes 9.3% annual free cash flow growth, a 10.0% discount rate, and a 12x exit multiple.
Intrinsic Value
$187.37
Margin of safety
+30.2%
Expected annual return
+7.5%
Base case assumptions: 9.3% annual growth, 10.0% discount rate, 12x exit multiple, 5 year projection. Data as of 2026-06-12.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the WDAY valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Workday, Inc. respond.
Open DCF Calculator for WDAYCompany Overview
Workday, Inc. delivers comprehensive, cloud-hosted enterprise software solutions to clients worldwide. These platforms empower organizations to strategize, operate, examine performance, integrate with existing systems, and oversee their overall business functions. A core offering includes a robust suite of financial management tools. These are designed to assist Chief Financial Officers (CFOs) in meticulously maintaining general ledger accounting data, streamlining financial workflows, gaining instant insights into financial and operational metrics, optimizing consolidation, accelerating month-end closes, bolstering internal controls and audit readiness, and ensuring uniformity throughout their financial activities. Workday also provides cloud-based spend management solutions. These facilitate smoother supplier engagement and contract administration, optimize the handling of indirect expenditures, and enable the effective execution of sourcing initiatives, including requests for proposals (RFPs). Its Human Capital Management (HCM) platform stands out, offering a comprehensive set of applications for overseeing the entire employee journey—from initial recruitment through to retirement. This empowers HR departments to efficiently handle hiring, onboarding, payroll, talent development, reskilling programs, and to cultivate exceptional employee experiences. Furthermore, the company offers dedicated applications for business planning, alongside powerful analytics and reporting capabilities. These advanced tools feature augmented analytics that translate complex data into easily digestible narratives for business users, leverage machine learning for enhanced operational efficiency and automation, and provide benchmarking features to compare performance against industry peers. Workday's diverse clientele spans numerous sectors, including professional and business services, financial institutions, healthcare providers, educational bodies, government agencies, technology firms, media organizations, retailers, and the hospitality industry. Originally incorporated in 2005 as North Tahoe Power Tools, Inc., the company adopted the name Workday, Inc. in July of the same year. Its corporate headquarters are located in Pleasanton, California.
Financial Metrics — WDAY Stock Valuation Data
Revenue/Share (TTM)
$38.81
FCF/Share (TTM)
$11.71
ROIC (TTM)
7.2%
ROE (TTM)
10.4%
P/FCF
11.5x
EV/EBITDA
22.4x
FCF Yield
8.67%
Debt/Equity
0.57x
Based on trailing twelve-month data, WDAY shows a free cash flow per share of $11.71 and a ROIC of 7.2%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 11.5x and FCF yield of 8.67% are important context metrics when evaluating WDAY's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of WDAY?
Workday, Inc. currently generates $11.71 in free cash flow per share. At the current price of $130.80, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is WDAY undervalued?
WDAY trades at a P/FCF ratio of 11.5x with a free cash flow yield of 8.67%. This relatively low P/FCF may suggest the stock is attractively priced relative to its cash generation. However, whether WDAY is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value WDAY stock using DCF?
To perform a DCF valuation on Workday, Inc.: (1) Start with the trailing free cash flow per share ($11.71) as the base, (2) project future FCF growth over 5-10 years based on Software - Application industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting WDAY's risk profile — with a debt-to-equity of 0.57x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to WDAY?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Workday, Inc., this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Software - Application trends, then discounting those amounts to today's dollars. WDAY's ROIC of 7.2% suggests the company may face challenges generating returns above its cost of capital.
How does WACC affect WDAY stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For WDAY, with a debt-to-equity ratio of 0.57x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 22.4x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See WDAY PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Technology valuationsDCF and P/E value WDAY with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-06-12. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.