Workday (NASDAQ:WDAY) has delivered strong growth for its cloud-based enterprise software applications since its initial public offering in October 2012. While the company's stock exploded out of the gate, and trades roughly 69% higher than its opening price, the last year has seen big pricing swings balance out to a decrease in value. Shares have fallen roughly 6.4% over the last 12 months, compared to roughly 11.2% growth for the S&P 500.

WDAY Chart

WDAY data by YCharts

Since the Nov. 24 release of the company's third-quarter earnings report, shares have fallen 11%, due mostly to projections for slowing growth, and now trade in the range that has shown the most stickiness over the past year. Is Workday stock an attractive investment option at current prices? Let's take a look.

Contextualizing Workday's last big stock contraction
Workday's share price dipped significantly upon the release of its last earnings report, and has yet to fully recover, but the company's third-quarter business wasn't the driving force behind the contraction. The quarterly results were actually better than expected, but they arrived in conjunction with projections that suggest that Workday's sales growth is beginning to slow substantially. The third quarter saw the software maker record 68.2% revenue growth, but it only expects between 54% and 56% year-over-year sales growth in the current quarterly period, and the company has projected that yearly growth for fiscal 2016 will be around 40%. Workday has averaged 76.36% year-over-year quarterly sales growth in its nine recorded quarters as a publicly traded company, and slowing growth is a concern for shareholders and prospective investors given that the company has yet to turn a profit and its stock currently trades at roughly 21.6 times trailing sales.

Will Workday continue to thrive as competitors devote more focus to the cloud?
Gartner projects that the total cloud ERP market will have undergone 17.6% compound annual growth from 2013 through 2018, which far exceeds the expected growth rate for on-premise solutions and ostensibly gives Workday a big opportunity. The software-as-a-service provider has been a driving force in the move to transition human resources applications to the cloud, and its rise has put pressure on larger purveyors of ERP software like SAP AG (NYSE:SAP) and Oracle (NYSE:ORCL). Those two competitors offer a much wider array of business software applications, while Workday has been mostly focused on human resources and financial management products. For context, Workday has approximately 700 customers, while SAP lists 183,000 total customers, 13,000 human resources customers, and approximately 700 customers for its SuccessFactors cloud HR suite.

With regard to cloud HR applications, customer satisfaction levels indicate that Workday offers high-quality solutions, and the company claims that its cloud offerings are several years ahead of those from Oracle and SAP, but the picture could change as its two larger competitors devote more resources to bolstering their cloud services. Oracle and SAP have benefited from gradual transitions from on-site to hybrid and full-on cloud applications, but cloud services look to be the growth drivers going forward. Workday's offerings are more integrated and unified than the broader applications ecosystems from Oracle and SAP, but this distinction has a lot to do with the larger companies offering a more diverse range of commercial processes, both on-premise and in the cloud.  As Oracle and SAP ramp up their cloud businesses and build better integration, they should be able to offer more applications under their unified ecosystems, appealing to a general client preference for dealing with fewer vendors, allowing pricing advantages, and bolstering available data for analytics.

So, is it time to be bullish on Workday?
I think there's a lot to like about Workday as a company. The SaaS provider is basically a first-mover in the cloud HR field, its services are highly regarded, and there's a growing brand backing up its products. The company's management is also populated with innovators and industry veterans. That said, I would recommend holding off on Workday's stock for the time being. The extent to which sales growth is expected to slow is a big concern for  me, particularly as Oracle and SAP are increasing their efforts to build their respective cloud ecosystems and minimize Workday's gains.

Workday needs to deliver consistent wins outside of its comfort zones, those being HR software and the North American market, and I expect it will encounter continued resistance on those fronts. For the nine months ending Oct. 31, 2014, less than 20% of Workday's total revenues have come from territories outside of the United States, and improving its overseas standing could require significant expenditures and weigh down its earnings. This is worrisome, as free cash flow has yet to see significant gains and net income has sagged since the company's IPO. With regards to apps, Workday's Financial Management suite is key to sales growth and expansion of the company's broader platform, but the product launched in 2007 and just hit 100 customers as of last September. Workday's stock could be a good play if you think the tides are turning, or will turn, on those fronts. Otherwise, it may not be worth the risk.