And then to wrap it up, I'm going to talk about Workday, ticker symbol WDAY. This is another software company that has been a victim of the SAS apocalypse. They sold off 62% from their high and they have rebounded in recent weeks.
Part of that was that there is rumors of an acquisition from Silverlake, a take private, similar to how they were involved in taking Electronic Arts, EA, private. So, there's some private equity interest in some of these beaten down software stocks.
And the reason is what we've been talking about earlier. They're solid businesses. Their fundamentals haven't declined. It's still growing. Reliable subscription revenue generates real free cash flow.
Free cash flow is up 28% year-over-year, $2.97 billion over the trailing 12 months. And some people are starting to look at these beaten down software stocks as value plays and opportunities.
They used to trade at premium multiples. Over the past 5 years, the median multiple for Workday stock is 41.2. That's adjusted earnings per share or the trailing 12 months past 5 years.
Its current multiple is 20.62. If the company returned to that median multiple, it would be 100% upside from here. But you also have to keep in mind that the fair value is growing because the business is growing.
Their earnings are growing. So at a certain point, a rerating upwards, think of it as it could be part of your margin of safety when you're investing. You don't want to be purely reliant on what the market thinks about your stock, how they choose to value it, but it can be a powerful margin of safety if you already believe that the actual earnings and fundamentals of the business are going to continue improving.