2 enterprise software stocks to buy, 2 to sell

Besides the emergence of the highly contagious omicron variant of COVID-19, COVID-19 cases are on the rise in several countries. The United States may soon reached a weekly average of 100,000 cases. Therefore, remote working conditions are expected to continue, which is expected to increase the demand for business software solutions. Additionally, with most companies adopting a hybrid work structure given the lower administrative expenses and increased employee productivity, the enterprise software industry is expected to witness impressive growth in the long run.

The growing use of big data has made enterprise software an integral part of today’s work culture. According to a survey by ReportLinker, the global enterprise software market is set to grow at a pace CAGR of 6.4% to $79.70 billion by 2026. However, with fierce competition, not all enterprise software stocks are good bets now.

So we think it might be a good idea to buy back the shares of quality enterprise software companies Oracle Corporation (ORCL) and Workday, Inc. (WDAY). But Bill.com Holdings, Inc. (INVOICE) and Fastly, Inc. (FSLY) look significantly overvalued at their current price levels, so best to avoid them now.

Click here to view our 2021 Cloud Computing Industry Report

Stocks to buy:

Oracle Corporation (ORCL)

Based in Redwood City, CA ORCL provides products and services that address enterprise information technology environments worldwide. Its Oracle cloud software as a service offers several cloud software applications.

On November 8, ORCL opened its first cloud region in France to meet the growing demands for cloud computing from private and public sector organizations. Karine Picard, Managing Director of Oracle France, said: “It is important that we offer private and public sector organizations the possibility of having a cloud infrastructure located in France to manage their most critical data and applications. We are currently seeing significant growth in our cloud business that reflects our customers’ desire to rapidly digitize their operations so they can better serve their customers. »

ORCL’s total revenue increased 3.9% year-over-year to $9.73 billion for its first quarter of fiscal 2022, ended August 31, 2021. operating result was $3.43 billion, representing a 6.7% year-over-year increase. Its net profit rose 9.2% year-over-year to $2.46 billion. Additionally, its EPS was $0.86, up 19.4% year-over-year.

For its 2022 fiscal year, analysts expect ORCL’s revenue to be $42.25 billion, a 4.4% year-over-year increase. The company’s EPS is expected to increase 10% year-over-year to $5.16 in fiscal 2023. It has exceeded consensus EPS estimates in each of the past four quarters. The stock has gained 38.7% in price since the start of the year.

ORCL POWR Rankings reflect this promising prospect. The stock has an overall A rating, which equates to a strong buy in our POWR rating system. POWR ratings rate stocks on 118 separate factors, each with its own weighting.

Also, the stock has a B rating for value, sentiment, stability, and quality. Within the Software app industry, it is ranked #4 out of 169 stocks. Click here to see additional POWR ratings for growth and momentum for ORCL.

Click here to view our Software Industry Report for 2021

Workday, Inc. (WDAY)

WDAY, headquartered in Pleasanton, California, provides enterprise cloud applications to help its customers manage critical business functions and optimize their financial and human resources. The company’s offerings include financial management applications, cloud expense management solutions and Workday applications for planning.

On November 18, WDAY agreed to acquire VNDLY, Inc. Pete Schlampp, Chief Strategy Officer at Workday, said, “VNDLY leads the industry in supplier management with an innovative and intuitive approach. The powerful combination of our technologies and talent will help customers better manage their changing workforce dynamics, helping them keep pace with the changing world of work today. . »

WDAY’s subscription services grew 21% year-over-year to $1.17 billion for its fiscal third quarter, ended October 31, 2021. Its total revenue increased 20% from to last year to reach $1.33 billion. Its net profit was $43.41 million, compared to a loss of $24.34 million the previous year. And its EPS was $0.17, compared to a loss of $0.10 in the prior period.

For its 2023 fiscal year, analysts expect WDAY’s revenue to be $6.10 billion, a 19.3% year-over-year increase. Additionally, the company’s EPS is expected to increase 25.9% year-over-year to $3.69 in fiscal 2022. Additionally, it exceeded consensus EPS estimates during each of the last four quarters. Over the past six months, the stock has gained 15.2% in price.

WDAY has an overall rating of B, which equates to a buy in our POWR rating system.

The stock has an A rating for growth and a B rating for sentiment and quality. Within the Software app industry, it is ranked #16. Click here to see additional POWR ratings for value, momentum and stability for WDAY.

Actions to avoid:

Bill.com Holdings, Inc. (INVOICE)

BILL provides cloud-based software that simplifies, digitizes and automates back-office financial operations worldwide for small and medium businesses. It also offers an artificial intelligence-based financial software platform that creates connections. BILL is headquartered at Palo Alto, California.

On September 1, 2021, BILL completed its acquisition of Invoice2go, a leading provider of mobile-first Accounts Receivable (AR) software, for $625 million. However, it may take some time for BILL to generate profits from this acquisition.

BILL’s revenue for the first quarter of its fiscal 2022 (ended September 30, 2021) was $116.4 million, up 151.9% year-over-year. However, its net loss was $75.69 million, compared to $12.95 million in the year-ago quarter. Additionally, its total current liabilities were $3.7 billion for the period ended September 30, 2021, compared to $2.33 billion for the period ended June 30, 2021. And its total liabilities were 4 .45 billion dollars against 3.44 billion dollars for the same period.

In terms of forward EV/S, BILL’s 55.15x is 1,191.6% better than the industry average of 4.27x. And its forward P/S of 55.99x is 1,248.1% above the industry average of 4.15x.

Analysts expect BILL’s EPS to remain negative in its 2022 and 2023 fiscal years. Additionally, its EPS is expected to decline at the rate of 575% year-over-year for the current year and 28.7% per year for the next five years. Over the past month, the stock price has fallen 15.9%.

BILL’s POWR ratings reflect its weak outlook. The stock has an overall F rating, which equates to a strong sell in our proprietary rating system.

It has an F rating for value and a D rating for growth, stability and quality. We also rated it for Momentum and Sentiment. Click on here to access all BILL odds. BILL is ranked #153 in the Software app industry.

Fastly, Inc. (FSLY)

FSLY operates an edge cloud platform for processing, serving and securing applications for its customers worldwide. The San Francisco company offers an infrastructure-as-a-service category that enables developers to build, secure, and deliver digital experiences at the edge of the Internet.

For the third quarter ended September 30, 2021, FSLY’s net loss was $56.20 million, compared to a loss of $23.78 million in the prior year period. Additionally, its loss per share was $0.48, down from $0.22 a year ago. Additionally, its total liabilities were $1.12 billion for the period ended September 30, 2021, compared to $158.09 million for the period ended December 31, 2020.

In terms of forward EV/S, FSLY’s 13.81x is 223.5% better than the industry average of 4.27x. And its forward P/S of 13.30x is 220.3% better than the industry average of 4.15x.

FSLY’s EPS is expected to remain negative in its 2021 and 2022 fiscal years. Its EPS is expected to decrease by 200% in the current year. Over the past month, the stock price has fallen 29.9%.

FSLY’s POWR ratings are consistent with this bleak outlook. The stock has an overall F rating, which translates to a strong sell. It has an F rating for quality and a D rating for value and stability in our proprietary rating system.

Click on here to access additional POWR ratings for FSLY (Growth, Momentum, and Sentiment). FSLY is ranked #159 in the Software app industry.

Click here to view our Software Industry Report for 2021


ORCL shares were up $0.07 (+0.08%) in premarket trading on Thursday. Year-to-date, ORCL has gained 40.88%, compared to a 21.67% rise in the benchmark S&P 500 over the same period.

About the Author: Riddhima Chakraborty

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master’s degree in economics, she helps investors make informed investment decisions with her insightful commentary. Following…

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