1 Overlooked Growth Stock Down 55% to Buy on the Dip, According to Wall Street

Workiva (NYSE: WK) developed a unique software platform that helps organizations bring their data together so they can create detailed reports for executives, investors, and even regulators like the Securities and Exchange Commission (SEC). The company just reported its financial results for the first quarter of 2025 (ended March 31), and it beat expectations on the top and bottom line.

Despite continued strength across its business, Workiva stock remains 55% below its record high set during the tech frenzy in 2021. It was overvalued back then (as were many enterprise software stocks), but it looks like a relative bargain at the current level.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

Wall Street seems to agree. The Wall Street Journal tracks 13 analysts who cover Workiva stock, and the overwhelming majority assigned it the highest-possible buy rating. Plus, not a single analyst recommends selling. Here's why investors might want to add Workiva to their portfolio.

Image source: Getty Images.

A critical platform for increasingly complex organizations

Technologies like cloud computing allow companies to operate online, where they can reach a much larger customer base and tap into a global workforce. But it also creates challenges for managers that have to monitor employees who are often working across dozens of different digital applications, especially if they are located on the other side of the world.

Workiva's platform eases that burden by integrating with most cloud storage solutions, systems of record, and accounting software, so managers can pull all of the organization's data onto one dashboard. That means they don't have to open each individual piece of software to find the information they need, which saves a significant amount of time and also prevents human errors associated with manually copying data into reports.

Once data is aggregated into Workiva, managers can choose from hundreds of different templates to help accelerate their reporting workflows. This is great for managers who regularly present key information to their executive teams, or those who are responsible for submitting filings to regulatory agencies.

Workiva is seeing rapid growth in its highest-spending customer cohorts

Workiva generated $206 million in revenue during the first quarter of 2025. It was a 17% increase compared to the year-ago period, and it was also above the high end of management's guidance of $205 million.

Workiva had a total of 6,385 customers at the end of the quarter, representing a modest year-over-year increase of 5%. However, the company experienced significantly faster growth among its highest-spending customer cohorts, namely those with annual contract values of $100,000; $300,000; and $500,000:

Image source: Workiva.

Workiva also beat expectations on the bottom line. While it lost $0.38 per share during the quarter on a generally accepted accounting principles (GAAP) basis, that was better than management's forecasted loss of $0.45 per share.

The company was actually profitable to the tune of $0.14 per share on a non-GAAP basis, which excludes one-off and non-cash expenses like stock-based compensation, and that was double management's forecast of $0.07 per share.

However, it's worth noting that both Workiva's GAAP loss and its non-GAAP profit were worse than the year-ago results, primarily because the company ramped up its operating expenses. It was a clear attempt to drive growth, because sales and marketing costs saw the biggest jump. CEO Julie Iskow said she continues to see broad demand across Workiva's product portfolio, so management might be leaning into that trend to capture as many new customers as possible.

Trying to acquire new customers is an especially good strategy right now, because Workiva's net revenue retention rate dipped to 110% during the first quarter (from 111% in the year-ago period), suggesting existing customers weren't increasing their spending as quickly as they have in the past. This might be one of the reasons Workiva stock declined following the release of its Q1 report.

Investors were also somewhat disappointed with Workiva's forward guidance. Although management expects revenue growth to hold steady at 17% in the second quarter, the company's bottom-line results appear set to worsen on both a GAAP and non-GAAP basis. Workiva has a solid balance sheet with $767 million in cash, equivalents, and marketable securities on hand, so it can comfortably continue to invest in growth, but investors would still prefer to see the company trending toward profitability.

Wall Street is bullish on Workiva stock

As I mentioned before, analysts who cover Workiva stock are bullish on its prospects. The analysts have an average price target of $102, which implies a potential upside of 54% over the next 12 to 18 months. The Street-high target of $112 suggests Workiva stock could deliver an even greater return of 70% instead.

The 55% decline in the stock from its 2021 high, combined with the company's consistent revenue growth since then, has pushed its price-to-sales (P/S) ratio down to just 4.9. It's close to the cheapest level in five years, and it's also a 49% discount to its average P/S ratio of 9.6 over that period:

WK PS Ratio data by YCharts

Over the longer term, it's possible Workiva stock delivers even more upside than Wall Street expects. The company values its addressable market at $35 billion, so it has barely scratched the surface of that opportunity based on its current revenue. Plus, considering Workiva's market capitalization is just $3.7 billion, that leaves a lot of room for growth.

As a result, this stock could be a great long-term addition to any portfolio.

Should you invest $1,000 in Workiva right now?

Before you buy stock in Workiva, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Workiva wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $623,685!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $701,781!*

Now, it’s worth noting Stock Advisor’s total average return is 906% — a market-crushing outperformance compared to 164% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 28, 2025

Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Workiva. The Motley Fool has a disclosure policy.