The demand for cloud-based solutions has increased significantly over the past few months thanks to the continuation of remote working and increasing adoption of cloud platforms by organizations worldwide that are seeking to make their operations more efficient and less expensive.
The cloud computing industry is expected to attain new heights in the coming months, driven by the commercialization of 5G, increased use of advanced technologies and the rise in e-commerce, among other factors. In fact, according to a Markets and Markets report, the cloud computing market is expected to grow from $371.4 billion in 2020 to $832.1 billion by 2025, representing a 17.5% CAGR.
Investors’ interest in cloud stocks is evidenced by First Trust Cloud Computing ETF’s (SKYY) and WisdomTree Cloud Computing Fund’s (WCLD) 7.6% and 13.8% returns, respectively, over the past month. This compares to SPDR S&P 500 Trust ETF’s (SPY) 3.2% gains over the same period. So, it could be wise now to bet on fundamentally-sound cloud stocks Workday, Inc. (WDAY), Teradata Corporation (TDC), Cloudera, Inc. (CLDR), and Box, Inc. (BOX).
Workday, Inc. (WDAY)
WDAY is a provider of enterprise cloud applications for finance and human resources. The company’s applications include Workday Financial Management and Workday Human Capital Management (HCM). It serves various industries, including technology, financial services, healthcare and life sciences, retail, and hospitality. WDAY is based in Pleasanton, California.
The company’s total revenue for fiscal first quarter ended April 30, 2021, came in at $1.18 billion, which represents a 15.4% year-over-year increase. WDAY’s non-GAAP net income increased 108.1% year-over-year to $226.36 million. Its non-GAAP EPS came in at $0.87, up 97.7% year-over-year.
Analysts expect WDAY’s EPS to increase 20.5% year-over-year to $3.52 in its fiscal year 2023. The company surpassed consensus EPS estimates in each of the trailing four quarters. Its revenue is expected to be $5.03 billion in 2022, which represents a 16.5% year-over-year rise.
WDAY completed the acquisition of Peakon ApS on March 9, 2021. Peakon Aps is an employee success platform that converts feedback into actionable insights. The platform is expected to provide WDAY clients with access to real-time visibility into employee experience, sentiment, and productivity to help drive engagement and improve organizational performance. The stock has gained 25% over the past year to close yesterday’s trading session at $238.55.
WDAY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
It also has an A grade for Growth, and B grade for Sentiment. Apart from these, one can see WDAY’s ratings for Momentum, Stability, Value, and Quality here.
WDAY is ranked #26 of 131 stocks in the Software-Application industry.
Teradata Corporation (TDC)
TDC in Dayton, Ohio, is a hybrid cloud analytics software provider that is focused on delivering data intelligence to its customers. It provides Teradata Vantage, which is a data warehouse and analytics platform. In addition, its business consulting services include consulting services to help organizations establish an analytic vision, and identify and operationalize analytical opportunities, among others.
For the first quarter, ended March 31, 2021, TDC’s total revenues came in at $491 million, which represents a 13.1% year-over-year increase. The company’s public cloud annual recurring revenue (ARR) increased 175.6% year-over-year to $124 million. Its non-GAAP net income increased 160% from the prior-year quarter to $78 million. And its non-GAAP EPS increased 155.6% year-over-year to $0.69.
TDC’s EPS and revenue are expected to increase 21.4% and 3.8%, respectively, year-over-year to $1.59 and $1.91 billion in fiscal 2021. Furthermore, it surpassed the consensus EPS estimates in each of the trailing four quarters.
The company has announced new capabilities for Vantage on Microsoft Azure, such as easier modernization of cloud data analytics infrastructure and enhanced security. This is expected to further expand TDC’s market reach in the data analytics in the cloud space. The stock has rallied 106.9% over the past six months to close yesterday’s trading session at $47.77.
TDC’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The stock has an A grade for Growth and Value, and a B grade for Quality. Click here to access TDC’s ratings for Stability, Sentiment, and Momentum as well.
TDC is ranked #1 of 3 stocks in the A-rated Technology-Storage industry.
Cloudera, Inc. (CLDR)
CLDR is a Palo Alto, Calif.-based developer of a platform for data management, machine learning and advanced analytics. It operates through two segments: subscription and services. The company’s products include Cloudera Enterprise Data Hub, Cloudera Analytic BD, and Cloudera Data Science & Engineering.
CLDR’s revenue for its fiscal first quarter ended April 30, 2021, came in at $224.28 million, which represents a 6.6% year-over-year increase. The company’s non-GAAP net income increased 137.6% year-over-year to $35.87 million. And its non-GAAP EPS came in at $0.12, up 140% year-over-year.
Analysts expect CLDR’s EPS and revenue to increase 21.4% and 9.2%, respectively, year-over-year to $0.51 and $1.01 billion in 2023. The company surpassed the Street’s EPS estimates in each of the trailing four quarters, which is impressive.
On June 1, 2021, CLDR announced that it had agreed to acquire Datacoral and Cazena in two separate transactions. These acquisitions are expected to support the evolution of the company’s public cloud offering and expand its market opportunity as it moves beyond big data to self-service. The stock has rallied 49% over the past nine months to close yesterday’s trading session at $16.00.
It’s no surprise that CLDR has an overall B rating, which equates to Buy in our POWR Ratings system. The stock has a B grade for Growth, Sentiment, Value, and Quality. To see more of CLDR’s component grades, click here.
CLDR is ranked #5 of 59 stocks in the Software- Business industry.
Box, Inc. (BOX)
BOX provides a cloud-based content management platform that enables organizations to manage their content easily and securely from anywhere on any device. Its Software-as-a-Service (SaaS) platform allows users to collaborate on content both internally and with external parties, automate content-driven business processes, and develop custom applications, among other functions. BOX is based in Los Altos, Calif.
The company’s revenue increased 10.3% year-over-year to $202.44 million for its fiscal first quarter ended April 30, 2021. BOX’s non-GAAP operating income came in at $34.40 million, up 99.9% year-over-year. Its non-GAAP net income increased 92.2% year-over-year to $30.56 million, and its non-GAAP EPS came in at $0.18, up 80% year-over-year.
BOX’s EPS is expected to increase 30.3% year-over-year to $0.99 in 2023. The company surpassed the consensus EPS estimates in each of the trailing four quarters. Its revenue is expected to increase 10.2% year-over-year to $849.72 million in 2022.
On June 17, the company announced the general availability of a new integration with ServiceNow’s Legal Service Delivery application to modernize legal operations. Burke Culligan, BOX’s Vice President of Product Management, Apps, and Integrations said, “Our work with ServiceNow continues to build on that promise to customers, and we’re thrilled to be enhancing our collaboration to create an even more frictionless experience for those looking to manage workflows and secure sensitive content in the cloud.” The stock has soared 53.5% over the past nine months to close yesterday’s trading session at $26.34.
BOX’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. It also has a B grade for Growth, Value, and Quality. In addition to these ratings, one can see BOX’s ratings for Sentiment, Momentum, and Stability here.
BOX is ranked #5 of 73 stocks in the Technology-Services industry.
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WDAY shares rose $0.50 (+0.21%) in premarket trading Wednesday. Year-to-date, WDAY has declined -0.44%, versus a 16.55% rise in the benchmark S&P 500 index during the same period.
About the Author: Ananyo Guha Niyogi
Ananyo’s ardent interest in capital markets, wealth management, and financial regulatory issues, led him to a career as an investment analyst. His goal is to educate individual investors by making complex financial issues easy to understand. More...
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