Key Takeaways:
- The 2-Minute Valuation Model values Workday stock at $310 per share in 2 years.
- That’s a potential 25% upside from today’s price of $248 per share, which would translate to approximately 12% annual returns over the next two years.
- WDAY stock is projected to grow EPS by 60% over the next 3 years as AI adoption accelerates.
- The enterprise software stock is trading at historically low valuations despite leading the HR and finance AI transformation verticals.
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Workday (WDAY) is the leading cloud-based enterprise software company providing human capital management (HCM) and financial management solutions to organizations worldwide.
With its unified platform serving over 60% of the Fortune 500 and powering more than 70 million users, Workday has established itself as the backbone of modern workforce and financial operations while positioning itself at the forefront of the enterprise AI revolution.
With WDAY stock now trading at $248 per share, Workday presents a compelling opportunity for investors seeking exposure to the digitization of HR and finance operations, enhanced by cutting-edge AI capabilities that are driving customer ROI and platform consolidation.
Let’s examine why this enterprise software leader could deliver substantial returns as it scales its AI monetization and expands across new markets and customer segments.
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What is the 2-Minute Valuation Model?
Three core factors drive a stock’s long-term value:
- Revenue Growth: How big the business becomes.
- Margins: How much the business earns in profit.
- Multiple: How much investors are willing to pay for a business’s earnings.
Our 2-Minute Valuation Model uses a simple formula to value stocks:
Expected Normalized EPS * Forward P/E ratio = Expected Share Price
Revenue growth and margins drive a company’s long-term normalized earnings-per-share (EPS), and investors can use a stock’s long-term average P/E multiple to get an idea of how the market values a company.
Why WDAY Stock Looks Undervalued
Forecast
Based on analyst estimates, Workday is expected to achieve steady earnings growth over the next three years as AI adoption drives platform consolidation and pricing power.
EPS is projected to grow from $7.30 in 2025 to $11.71 by 2028, representing a 60% increase over three years.
The growth trajectory shows consistent acceleration driven by AI monetization and market share gains.
In fiscal 2026, WDAY stock is expected to deliver 20% EPS, followed by 16% in 2027 and 15% in 2028.
This earnings growth for Workday stock is likely to be driven by:
- AI product adoption: New AI ACV more than doubled year-over-year, with 25% of customer expansions including AI products.
- Platform consolidation: Customers are consolidating on Workday’s unified HCM and finance platform for cost savings.
- Full-suite penetration: Over 30% of new wins are full-suite deals that combine both HCM and financials.
- International expansion: Strong growth momentum in EMEA and APAC markets.
- Medium enterprise opportunity: WorkdayGO initiative targeting faster implementations for mid-market customers.
For our valuation, we’ll estimate that Workday stock will reach $11.50 in EPS by fiscal 2028.
See Workday’s full analyst estimates and growth forecast (It’s free) >>>
Valuation Multiple
As shown in the valuation chart, Workday stock trades at approximately 28x forward earnings, which is below its five-year historical average P/E of 54x.
For our valuation, we’ll use a conservative forward P/E multiple of 27x. This is well below the company’s historical average and just below the current multiple, which is reasonable given Workday’s expected earnings growth of over 17% annually.
Fair Value of WDAY Stock
Using our 2-Minute Valuation Model and applying a conservative approach:
- Conservative 2028 EPS estimate: $11.50
- Conservative forward P/E multiple: 27x
Expected Normalized EPS ($11.50) * Forward P/E ratio (27x) = Expected Share Price ($310)
The 2-year expected Workday stock price we would get from this valuation is $310 per share.
Workday stock is currently trading at around $248 per share, which implies a potential upside of 25% over the next two years or a 12% annualized return.
A 12% annual return for investors would be pretty nice for investors, considering the S&P 500 index has delivered approximately 10% annual returns over the last six decades.
Remember, this is just a valuation exercise, and we don’t know for sure what the stock’s price will be in the future.
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What is the Average Analyst Price Target for Workday Stock?
Analysts believe Workday stock is undervalued, with an average price target of $298 per share. That implies approximately 20% upside from its current trading price.
Risks to Consider
Despite the bullish outlook, investors should be aware of several risks that could impact the software company’s growth trajectory:
- Macro uncertainty: Economic headwinds affecting enterprise IT spending, particularly in SLED and international markets.
- Competition intensity: Rivals like SAP and Oracle are investing heavily in cloud and AI capabilities.
- Customer concentration: Dependence on large enterprise customers who may delay or reduce spending.
- Execution risk: Successfully scaling AI monetization and international expansion requires flawless execution.
TIKR Takeaway
Workday presents a compelling value opportunity at current levels. The tech stock’s upside potential is driven by its leadership position in enterprise HR and finance software, accelerating AI adoption, and platform consolidation trends, all while trading at historically attractive multiples.
While WDAY faces typical enterprise software headwinds stemming from macroeconomic uncertainty, its strong competitive positioning, data advantage, and comprehensive AI strategy position it uniquely to benefit from the ongoing digital transformation of enterprise back-office operations.
Is Workday stock a buy over the next 24 months? Use TIKR to check the stock’s analyst price targets and growth forecasts to see if it is undervalued today.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
