Critical Survey: Workday (NASDAQ:WDAY) versus Proofpoint (NASDAQ:PFPT)

Workday (NASDAQ:WDAY) and Proofpoint (NASDAQ:PFPT) are both computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, profitability, dividends, valuation, institutional ownership and earnings.

Risk & Volatility

Workday has a beta of 1.56, indicating that its share price is 56% more volatile than the S&P 500. Comparatively, Proofpoint has a beta of 1.37, indicating that its share price is 37% more volatile than the S&P 500.

Valuation and Earnings

This table compares Workday and Proofpoint’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Workday $3.63 billion 12.15 -$480.67 million ($1.42) -132.03
Proofpoint $888.19 million 7.06 -$130.26 million ($0.72) -152.07

Proofpoint has lower revenue, but higher earnings than Workday. Proofpoint is trading at a lower price-to-earnings ratio than Workday, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Workday and Proofpoint’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Workday -13.68% -14.70% -5.40%
Proofpoint -18.85% -10.15% -2.83%

Insider and Institutional Ownership

67.1% of Workday shares are held by institutional investors. Comparatively, 94.6% of Proofpoint shares are held by institutional investors. 29.8% of Workday shares are held by company insiders. Comparatively, 2.4% of Proofpoint shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Workday and Proofpoint, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Workday 1 14 16 1 2.53
Proofpoint 0 6 15 1 2.77

Workday presently has a consensus target price of $196.29, indicating a potential upside of 4.70%. Proofpoint has a consensus target price of $141.57, indicating a potential upside of 29.30%. Given Proofpoint’s stronger consensus rating and higher probable upside, analysts clearly believe Proofpoint is more favorable than Workday.

Summary

Proofpoint beats Workday on 8 of the 14 factors compared between the two stocks.

Workday Company Profile

Workday, Inc. provides enterprise cloud applications worldwide. Its applications help its customers to manage critical business functions and optimize their financial and human capital resources. The company offers Workday Financial Management application that provides functions of general ledger, accounting, accounts payable and receivable, cash and asset management, revenue management, and grants management, as well as project and resource management, time and expense tracking, project billing, revenue recognition, financial reporting, and analytics. It also provides Workday Human Capital Management (HCM) application, which includes human resources management, such as workforce lifecycle and organization management, compensation, absence, and employee benefits administration; and global talent management comprising goal and performance management, succession planning, and career and development planning, as well as other HCM solutions, such as Workday Recruiting, Time Tracking, Payroll, and Learning. In addition, the company offers business planning, analytics, and other solutions, including Insights Business Planning Cloud, a solution with built-in intelligence for finance, human resource, and sales teams; Workday Prism Analytics that enables customers to bring together various data with analytics tools for financial and people analytics to make business decisions; Workday Student, a student and faculty lifecycle information system to help colleges and universities; and Workday Data-as-a-Service that provides data to customers to enable informed decision-making. The company serves technology, financial services, business and professional services, healthcare and life sciences, manufacturing, retail and hospitality, education, and government and non-profit industries. The company was formerly known as North Tahoe Power Tools, Inc. and changed its name to Workday, Inc. in July 2005. Workday, Inc. was founded in 2005 and is headquartered in Pleasanton, California.

Proofpoint Company Profile

Proofpoint, Inc. operates as a security-as-a-service provider that enables large and mid-sized organizations to defend, protect, archive, and govern their sensitive data worldwide. It offers protection against advanced and targeted threats, including malicious attachments, polymorphic threats, zero-day exploits, user-transparent ‘drive-by' downloads, malicious Web links, hybrid threats, malware free attacks, and other penetration tactics. The company also provides integrated email security, advanced threat, information protection and archiving, and digital risk protection product services. In addition, it offers solutions that enable secure business-to-business and business-to-consumer communications; email encryption services that encrypt sensitive emails and deliver them to PC or mobile device; file-transfer solutions for end-users to share various forms of documents and other content; security optimized cloud architecture solutions; and extensible security-as-a-service platform. The company serves aerospace and defense, education, financial services, government, healthcare, manufacturing, and retail sectors. Proofpoint, Inc. was founded in 2002 and is headquartered in Sunnyvale, California.

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