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    Workday (WDAY) Stock Could Be 45% Undervalued After Government Customer Wins

    Simply Wall St·09/15/2026 00:31:24
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    Workday has seen its share price slide in recent years, and that kind of drawdown tends to push investors back to first principles. The key issue now is whether the current valuation can be supported by the cash the business is expected to generate over time.

    • The stock has fallen 27.3% over the past 5 years. That puts the focus squarely on whether the current share price still lines up with the company’s ability to produce cash.
    • New wins with state and local governments, where agencies are replacing legacy HR and finance systems with Workday’s platform, may support expectations for steadier long term cash inflows from public sector clients.
    • Prefer to judge Workday on earnings? See why Workday's 37.4x P/E tells a different valuation story.

    For investors, the debate is whether Workday’s current share price is fully justified by the cash flows implied by a Discounted Cash Flow (DCF) view of the business.

    If you are weighing whether Workday’s recent share price decline is justified by its cash flows, it can help to compare it with a focused list of 35 high quality undervalued stocks.

    Is Workday Still Cheap on Cash Flow?

    The Discounted Cash Flow model here takes Workday’s expected future cash generation and discounts it back into today’s dollars. On this view, the latest twelve month free cash flow sits at about $2.8b, with analyst projections pointing to higher annual cash flows by 2031 and a gradual slowing in the estimated growth rate further out. That pattern fits a business that is still building its cash engine but is also expected to mature over time.

    Because the DCF projections put Workday's estimated intrinsic value substantially above the current share price of $194.21, the market is treating those future cash streams cautiously. The recent news that Workday is signing a new state or local government customer nearly every week helps explain why analysts model ongoing cash flow expansion from public sector clients, while the share price still leaves a gap for investors to judge. Find out what Workday could be worth using our Discounted Cash Flow (DCF) estimate.

    The Workday Narrative: What Would Justify Today's Price?

    Simply Wall St Narratives pick up where the Workday valuation puzzle leaves off by explaining what would need to happen to future growth, margins and earnings for the shares to be worth substantially more or less than today’s price. Each scenario links a fair value to a clear story about potential catalysts and risks so you can track over time which version of Workday’s journey appears to be unfolding on the Community page.

    Community views on Workday now split between those who see a large discount and those who think expectations already run ahead of themselves.

    Bull case: 65% undervalued

    "Workday's $27.3 billion subscription backlog is not a hypothetical pipeline, it is contracted revenue that converts over the coming years..."

    Discover why this Narrative puts Workday at 65% undervalued.

    Bear case: 13% overvalued

    "Strong adoption of AI-powered products and targeted acquisitions are boosting cross-selling opportunities and supporting sustained growth and higher average contract values..."

    Explore why this Narrative puts Workday at 13% overvalued.

    One more angle on Workday that could change the story

    Cash flows tell you what Workday produces, but the people deciding where every dollar goes and how they are rewarded for those choices can tilt the long term outcome in ways the models do not capture. See who runs Workday and how they are paid.

    This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.