Human resources management may not sound like the most exciting industry, but there’s no denying its growth potential. Its 8% annual growth, expectations of being worth $15 billion in 2018 (it’s currently worth $10 billion) and intersecting trends with technology make this an industry that should produce some solid opportunities in the future.
Within the human resources sector I have my eye on one company that’s truly changing the game in terms of intersecting industry trends. Workday Inc (WDAY) is a human resources and financial software company that uses cloud technology to help other companies manage time and talent through the cloud rather on its clients’ premises.
Workday’s late 2012 initial public offering was at the time one of the biggest tech IPOs since Facebook (FB) and served as a solid reminder of the excitement surrounding cloud technology and upstarts that dared to challenge enterprise resource planning software stalwarts like Oracle (ORCL) and SAP SE (ADR) (SAP).
Workday stock soared more than 74% on its first day of trading and peaked at $116, far above the $28 offering price. While WDAY stock price quickly retraced during the great “software stock meltdown” earlier this year, Workday’s long-term backdrop for human capital management software leads me to believe there is plenty of growth ahead for both this company and its stock.
Just this year alone WDAY has tracked some impressive growth. Workday stock is up nearly 12% this year, having rebounded more than 44% from its 52-week low on April 28, and yet is still trading almost 25% from its all-time high. Clearly there is more room for Workday stock to climb, and Monday’s third-quarter earnings report could prove to be the catalyst we’ve been waiting for.
Workday will report results after the close on Nov. 24, and analysts are expecting an earnings loss of 10 cents per share (versus a 12 cents per share loss last year) on 60% revenue growth to $205 million. The Wall Street Journal recently highlighted Workday’s likelihood of further expanding its offerings to extend its business applications, as it continues to bring enterprise software offerings (like those sold by SAP) into the cloud. Success here could eventually pave the way for WDAY to bring in annual sales in excess of $5 billion to $7.5 billion — only expanding upon its currently small portion of the $10 billion HR market.
I am looking forward to what Workday brings to the table next week and would recommend buying WDAY stock if you can find it under $92. Let’s see how much higher WDAY stock can climb.