Oracle Corporation (ORCL): Is Workday Inc (WDAY) Overvalued?

Germany-based SAP AG (ADR) (NYSE:SAP) also has some causes for concern. They suffer from many of the same afflictions as Oracle: expensive, not built for the cloud, and customers that aren’t happy. Another problem for SAP is that what ails them — being expensive — is the only way that they know how to make money. At least, Oracle bought PeopleSoft years ago, which is a viable competitor to Workday. SAP has nothing so far and it would make sense to stay away from it.

All of this seems funny to say, since Oracle and SAP AG (ADR) (NYSE:SAP) are making some actual money when compared to Workday. But, Workday has way more upside to grow with their suite of cloud-based HR and financial solutions. Actually, they would be taking business from Oracle in their quest for profitability. Oracle Corporation (NASDAQ:ORCL)’s stock price reached a new high recently, so it appears they have hit their top. Now is not the time to be buying any Oracle shares.

Back to Workday, and the question of valuation. Is it overvalued? It seems to be. The post-IPO sell-off period for the company has come and gone, and the stock is doing well. This is despite its financial performance, which is befuddling. While the technology behind Workday seems solid, I question its financials. There is a good degree of interest in this stock from an institutional standpoint, so, it is a company to watch because interest is only going to grow at this point. If they make some money, this stock will take off.

The article Is This Cloud HR Company Overvalued? originally appeared on Fool.com and is written by Daniel Cawrey.

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