The value investing playbook is straightforward: find solid companies trading below what they're worth, then hold on for the long haul as the market eventually recognizes that gap. The approach, popularized by Benjamin Graham in the 1930s and mastered by Warren Buffett, relies on separating market noise from underlying business reality. One way to surface candidates is by screening for stocks that combine low valuation with decent fundamentals—companies that may be temporarily out of favor rather than structurally broken. Using ChartMill’s fundamental ratings, a "Decent Value" screen filters for stocks with a valuation score of 7 or higher, while requiring profitability, health, and growth scores of at least 5 each. That’s a tough bar that tends to reveal overlooked opportunities.
Workday Inc-Class A (NASDAQ:WDAY) recently popped up on such a screen, and the numbers explain why. The enterprise cloud software firm, known for its human resources and financial management platforms, currently carries an overall fundamental rating of 6 out of 10 from ChartMill. That’s not flashy, but the detail beneath the headline is what matters for value hunters.
Valuation Metrics
The core of any value thesis is valuation, and WDAY scores an 8 out of 10 in that category. Its trailing price-to-earnings ratio of 12.86 makes it cheaper than 82% of its peers in the software industry—a sector where the average P/E hovers near 30. Even more telling, the forward P/E falls to 9.69, meaning the market is pricing in earnings growth at a deeply discounted rate. Compared to the S&P 500’s average forward P/E of 21.48, WDAY stands out as genuinely inexpensive.
This low valuation matters because it provides the margin of safety that value investors crave. When a stock trades this far below industry multiples, the downside is cushioned even if growth disappoints. As Graham taught, buying with a buffer between price and intrinsic value is the best defense against the inevitable miscalculations in any forecast.
Profitability and Growth
A cheap stock that’s struggling isn’t value—it’s a trap. WDAY avoids that fate with a profitability rating of 6. The company has been profitable every year for the past five years and generated positive operating cash flow consistently. Return on equity sits at 12.67%, outpacing nearly 78% of its industry, while return on invested capital improved sharply from a 3.62% three-year average to 9.14% currently. That upward trend in ROIC signals that management is deploying capital more efficiently.
Growth is where WDAY really shines, earning a 7 out of 10. Earnings per share grew 24% last year and have compounded at 26.32% annually over the past several years. Revenue has followed a similar trajectory, climbing 13.32% in the latest year and 17.21% per year on average. Analysts expect EPS to grow another 11.51% annually going forward, with revenue expanding near 10.6%. For a company valued at roughly 13 times earnings, that growth profile is unusual.
The combination matters because growth without valuation leads to expensive stocks that can crater on any miss. Valuation without growth leads to value traps. WDAY offers both—a rarity that the screen specifically targets.
Financial Health
No company is a bargain if it’s drowning in debt. WDAY’s health rating of 5 reflects a mixed but manageable picture. Its debt-to-equity ratio of 0.30 is reasonable, and the debt-to-free-cash-flow ratio of 1.01 means the company could theoretically pay off all its obligations in just over a year using its cash flow. The Altman-Z score of 2.79 places it in the “grey zone,” but that’s better than 61% of peers.
The areas that drag the health score down are liquidity metrics. Both the current ratio and quick ratio sit at 1.01, which is below average for the software industry. That’s not alarming for a subscription-based company with recurring revenue, but it’s worth monitoring. Value investors who prioritize a strong balance sheet will want to see improvement here, though the low debt load largely offsets the concern.
Analyst Views and Market Context
The broader market backdrop adds some nuance. The S&P 500’s long-term trend is negative, but the short-term trend has turned positive. That kind of mixed picture can create opportunities for value investors, as near-term pessimism may obscure longer-term value. For a company like WDAY, which trades well below both industry and market multiples, any stabilization in sentiment could act as a catalyst.
A full breakdown of these fundamental ratings is available in the detailed fundamental analysis report from ChartMill, which offers a deeper examination of each component.
Finding More Candidates
The screen that surfaced WDAY is designed to repeat this kind of discovery. It targets stocks with strong valuation scores, while maintaining minimum thresholds for growth, health, and profitability. For investors who want to explore further, the full list of current results can be accessed through this live stock screener link, which updates as market data changes.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always conduct your own research or consult a financial professional before making investment decisions.
Read full article here »
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Workday Inc-Class A (NASDAQ:WDAY) Screens as a Decent Value Play With Low Valuation and Strong Growth
The value investing playbook is straightforward: find solid companies trading below what they're worth, then hold on for the long haul as the market eventually recognizes that gap. The approach, popularized by Benjamin Graham in the 1930s and mastered by Warren Buffett, relies on separating market noise from underlying business reality. One way to surface candidates is by screening for stocks that combine low valuation with decent fundamentals—companies that may be temporarily out of favor rather than structurally broken. Using ChartMill’s fundamental ratings, a "Decent Value" screen filters for stocks with a valuation score of 7 or higher, while requiring profitability, health, and growth scores of at least 5 each. That’s a tough bar that tends to reveal overlooked opportunities.
Workday Inc-Class A (NASDAQ:WDAY) recently popped up on such a screen, and the numbers explain why. The enterprise cloud software firm, known for its human resources and financial management platforms, currently carries an overall fundamental rating of 6 out of 10 from ChartMill. That’s not flashy, but the detail beneath the headline is what matters for value hunters.
Valuation Metrics
The core of any value thesis is valuation, and WDAY scores an 8 out of 10 in that category. Its trailing price-to-earnings ratio of 12.86 makes it cheaper than 82% of its peers in the software industry—a sector where the average P/E hovers near 30. Even more telling, the forward P/E falls to 9.69, meaning the market is pricing in earnings growth at a deeply discounted rate. Compared to the S&P 500’s average forward P/E of 21.48, WDAY stands out as genuinely inexpensive.
This low valuation matters because it provides the margin of safety that value investors crave. When a stock trades this far below industry multiples, the downside is cushioned even if growth disappoints. As Graham taught, buying with a buffer between price and intrinsic value is the best defense against the inevitable miscalculations in any forecast.
Profitability and Growth
A cheap stock that’s struggling isn’t value—it’s a trap. WDAY avoids that fate with a profitability rating of 6. The company has been profitable every year for the past five years and generated positive operating cash flow consistently. Return on equity sits at 12.67%, outpacing nearly 78% of its industry, while return on invested capital improved sharply from a 3.62% three-year average to 9.14% currently. That upward trend in ROIC signals that management is deploying capital more efficiently.
Growth is where WDAY really shines, earning a 7 out of 10. Earnings per share grew 24% last year and have compounded at 26.32% annually over the past several years. Revenue has followed a similar trajectory, climbing 13.32% in the latest year and 17.21% per year on average. Analysts expect EPS to grow another 11.51% annually going forward, with revenue expanding near 10.6%. For a company valued at roughly 13 times earnings, that growth profile is unusual.
The combination matters because growth without valuation leads to expensive stocks that can crater on any miss. Valuation without growth leads to value traps. WDAY offers both—a rarity that the screen specifically targets.
Financial Health
No company is a bargain if it’s drowning in debt. WDAY’s health rating of 5 reflects a mixed but manageable picture. Its debt-to-equity ratio of 0.30 is reasonable, and the debt-to-free-cash-flow ratio of 1.01 means the company could theoretically pay off all its obligations in just over a year using its cash flow. The Altman-Z score of 2.79 places it in the “grey zone,” but that’s better than 61% of peers.
The areas that drag the health score down are liquidity metrics. Both the current ratio and quick ratio sit at 1.01, which is below average for the software industry. That’s not alarming for a subscription-based company with recurring revenue, but it’s worth monitoring. Value investors who prioritize a strong balance sheet will want to see improvement here, though the low debt load largely offsets the concern.
Analyst Views and Market Context
The broader market backdrop adds some nuance. The S&P 500’s long-term trend is negative, but the short-term trend has turned positive. That kind of mixed picture can create opportunities for value investors, as near-term pessimism may obscure longer-term value. For a company like WDAY, which trades well below both industry and market multiples, any stabilization in sentiment could act as a catalyst.
A full breakdown of these fundamental ratings is available in the detailed fundamental analysis report from ChartMill, which offers a deeper examination of each component.
Finding More Candidates
The screen that surfaced WDAY is designed to repeat this kind of discovery. It targets stocks with strong valuation scores, while maintaining minimum thresholds for growth, health, and profitability. For investors who want to explore further, the full list of current results can be accessed through this live stock screener link, which updates as market data changes.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Always conduct your own research or consult a financial professional before making investment decisions.
Read full article here »