Workday Inc's P/E Ratio: Assessing Valuation Rationality Amid High Growth Projections

The Price-to-Earnings (P/E) ratio remains a cornerstone metric for evaluating stock valuations, particularly for high-growth technology firms like Workday Inc (WDAY). As of November 26, 2025, Workday's P/E ratio stood at 90.48, a figure that reflects both its market capitalization and earnings performance over the trailing twelve months (TTM). However, this number contrasts with earlier readings, such as the 101.36 TTM P/E ratio reported on November 20, 2025, underscoring the dynamic nature of valuation metrics in fast-evolving sectors. To determine whether this elevated P/E ratio is justified, investors must weigh Workday's current financial landscape against its projected earnings growth and broader market dynamics.

Current P/E Ratio: A Tale of Volatility and Context

Workday's P/E ratio has fluctuated significantly in late November 2025, ranging from 70.07 to 103.53 across different sources. These variations stem from differences in the timing of data collection and the specific earnings per share (EPS) figures used in calculations. For instance, the 90.48 P/E ratio on November 26, 2025, likely incorporates updated stock prices and revised EPS estimates, whereas the 101.36 TTM P/E ratio from November 20, 2025, reflects a longer-term earnings trajectory. Such volatility is not uncommon for SaaS (Software-as-a-Service) companies, where investor sentiment often hinges on forward-looking guidance and market share expansion.

A key consideration is whether Workday's P/E ratio aligns with its growth prospects. Historically, SaaS firms with robust revenue expansion and scalable business models command higher P/E ratios, as investors price in future earnings potential. Workday's subscription revenue guidance for fiscal 2026-projected to reach $8.828 billion, representing 14.4% year-over-year growth-provides a critical benchmark. This growth, coupled with its dominant position in human capital management (HCM) and financial management software, suggests that the market may be willing to tolerate a premium valuation.

Future Earnings Potential: A 33% Annual EPS Growth Outlook

To assess the rationality of Workday's P/E ratio, it is essential to evaluate its projected earnings growth. Analysts at Future Criteria anticipate a 33% annual earnings per share (EPS) growth rate for Workday, a figure that dwarfs the broader SaaS industry average. This optimism is supported by the company's Q4 2026 guidance, which forecasts subscription services revenue of $2.355 billion-a 15.5% increase year-over-year. Additionally, DA Davidson's consensus estimate of $2.63 per share for full-year 2026 EPS implies a significant upward trajectory in profitability.

These projections are underpinned by Workday's strategic investments in AI-driven analytics, cloud infrastructure, and global market expansion. For example, its recent enhancements to Workday Adaptive Planning and Workday Payroll have strengthened cross-selling opportunities, while its focus on emerging markets is expected to diversify revenue streams. Such initiatives not only bolster near-term revenue but also position Workday to capture long-term value in an increasingly digitized corporate landscape.

Valuation Rationality: Balancing P/E and Growth

The question of whether Workday's P/E ratio is justified ultimately hinges on the interplay between its current valuation and future earnings potential. A P/E ratio of 90.48 may appear lofty at first glance, but when juxtaposed with a 33% annual EPS growth forecast, it begins to align with the valuation norms of high-growth tech stocks. For context, the SaaS sector's median P/E ratio typically ranges between 30 and 50, but outliers like Snowflake and Palantir have traded at multiples exceeding 100 during periods of strong growth expectations.

However, investors must remain cautious. Workday's P/E ratio is sensitive to near-term earnings volatility. If the company fails to meet its 2026 EPS targets-say, due to macroeconomic headwinds or competitive pressures-the multiple could contract sharply. Conversely, sustained outperformance could further justify the premium, particularly as Workday's customer retention rates and gross margins remain robust.

Conclusion: A High-Conviction Play for Growth-Oriented Investors

Workday Inc's P/E ratio of 90.48 as of November 26, 2025, reflects a market that is pricing in aggressive earnings growth and long-term dominance in the HCM and financial management sectors. While the valuation appears elevated, the company's 14.4% revenue growth guidance, 33% EPS growth projections, and strategic product innovations provide a compelling case for its rationality. For investors with a high-risk tolerance and a focus on long-term capital appreciation, Workday's stock remains a high-conviction opportunity-provided the company continues to execute on its growth roadmap.