Guidewire (GWRE) AI Stock Analysis

• Market Cap: $19.87B
• Dividend Yield: N/A
• Average Volume (3M): 1.03M
• Price to Earnings (P/E): 599.3
• Beta (1Y): 1.00
• Revenue Growth: 18.61%
• EPS Growth: N/A
• Country: US
• Employees: 3,507
• Sector: Technology
• Sector Strength: 89
• Industry: Software - Application
• EPS (TTM): 0.88
• Shares Outstanding: 84,195,220
• 10 Day Avg. Volume: 924,493
• 30 Day Avg. Volume: 1,026,454
• PEG Ratio: 1.96
• Price to Book (P/B): 14.66
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 83.82
• Enterprise Value/Market Cap: 1.02
• Enterprise Value/Revenue: 4.77
• Enterprise Value/Gross Profit: 28.60
• Enterprise Value/Ebitda: 125.70
• 1Y Price Target: $258.54
• Price Target Upside: 10.08% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 15

• Rating: 71 Outperform
• Price Target: $277.00 ▲(17.94%Upside)

Guidewire's strong financial performance and robust earnings call results are the main drivers of its score. The company shows solid revenue growth and strategic positioning in the cloud sector. However, technical indicators warn of overbought conditions, and a high P/E ratio suggests overvaluation risks.

Positive Factors

Cloud Migration

The accelerating cadence of cloud migrations is leading to greater deal frequency and increasing deal sizes.

Financial Performance

Guidewire posted one of its strongest quarterly beats, which is impressive in the macro environment.

Market Position

Guidewire is a dominant player in a market with high barriers to entry and has almost no churn, given how deeply entrenched it is within insurers' mission-critical systems.

Negative Factors

Risk/Reward Balance

Despite strong execution, the analyst reiterates an Underperform rating, believing risk/reward is more attractive in other software stocks.

Stock Performance

Expected share price return is projected to be -8.8%, indicating a potential decline in stock value.

Valuation Concerns

Following the strong 40% YTD rally in GWRE shares, many investors push back on GWRE valuation as the stock currently trades on 13x 2026E EV/Sales, making it among the more expensive names in SaaS universe.

Guidewire Business Overview & Revenue Model

Company Description

Guidewire Software, Inc. (GWRE) is a leading provider of software products primarily for property and casualty (P&C) insurers. The company operates in the technology sector, offering a platform that combines core operations, data and analytics, and digital engagement across the insurance lifecycle. Guidewire's products include cloud-based applications designed to support insurance operations such as underwriting, policy administration, billing, and claims management, which help insurers improve their efficiency, decision-making, and customer engagement.

How the Company Makes Money

Guidewire makes money primarily through the sale of its software products and services to P&C insurers. The company's revenue model includes subscription fees for its cloud-based platform, which provides insurers with continuous updates, security, and scalability. Additionally, Guidewire generates revenue from licensing its on-premise software solutions, maintenance and support services, and professional services such as implementation and consulting. Significant partnerships with global system integrators and consulting firms also contribute to Guidewire’s earnings by facilitating the deployment and integration of its solutions for customers worldwide.

Guidewire Financial Statement Overview

Summary

Guidewire demonstrates a strong financial position with consistent revenue growth and improving profitability. The balance sheet reflects stability with prudent leverage, while cash flow metrics show efficient cash utilization and growth. Areas for improvement include enhancing net profit margins and return on equity to further strengthen financial performance.

Income Statement

Guidewire shows strong revenue growth with a TTM increase of 16.01% compared to the previous annual period. The gross profit margin improved to 62.12% TTM, demonstrating operational efficiency. Positive net income TTM indicates a turnaround from past losses, although the net profit margin is relatively modest at 3.04%. EBIT and EBITDA margins have notably improved, indicating better cost management.

Balance Sheet

The company maintains a solid equity base with an equity ratio of 54.76% TTM, showing strong balance sheet stability. The debt-to-equity ratio is moderate at 0.52 TTM, indicating manageable leverage. Return on equity is modest at 2.54% TTM, reflecting room for improvement in profitability.

Cash Flow

Free cash flow grew by 34.73% TTM, reflecting strong cash generation. The operating cash flow to net income ratio of 7.22 TTM indicates excellent cash conversion from earnings, and the free cash flow to net income ratio is robust at 6.90 TTM, highlighting effective cash management.

Breakdown	TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Income Statement
Total Revenue	1.14B	980.50M	905.34M	812.61M	743.27M	742.31M
Gross Profit	706.68M	583.36M	458.21M	352.22M	368.21M	404.29M
EBITDA	71.85M	2.21M	-101.21M	-176.73M	-37.17M	36.26M
Net Income	34.61M	-6.10M	-111.86M	-180.43M	-66.51M	-27.20M
Balance Sheet
Total Assets	2.49B	2.23B	2.03B	2.27B	2.32B	2.36B
Cash, Cash Equivalents and Short-Term Investments	920.44M	1.00B	798.68M	976.17M	1.12B	1.13B
Total Debt	706.71M	442.92M	440.14M	475.58M	459.20M	449.62M
Total Liabilities	1.13B	883.56M	828.42M	815.24M	776.95M	708.08M
Stockholders Equity	1.36B	1.34B	1.20B	1.45B	1.54B	1.66B
Cash Flow
Free Cash Flow	238.81M	177.22M	20.97M	-59.72M	82.73M	87.41M
Operating Cash Flow	249.81M	195.75M	38.40M	-37.94M	111.59M	113.07M
Investing Cash Flow	-185.87M	-52.36M	12.71M	312.21M	64.19M	-5.80M
Financing Cash Flow	82.61M	1.05M	-261.58M	-37.34M	-159.39M	4.96M

Guidewire Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 234.87
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GWRE, the sentiment is Neutral. The current price of 234.87 is below the 20-day moving average (MA) of 241.12, above the 50-day MA of 220.04, and above the 200-day MA of 196.23, indicating a neutral trend. The MACD of 5.59 indicates Positive momentum. The RSI at 50.81 is Neutral, neither overbought nor oversold. The STOCH value of 10.53 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for GWRE.

Guidewire Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BSY	81 Outperform	$15.90B	66.81	25.20%	0.53%	10.71%	-27.64%
PEGA	80 Outperform	$8.66B	50.19	39.29%	0.24%	14.29%	151.35%
SSNC	78 Outperform	$19.85B	25.35	12.34%	1.23%	6.92%	28.43%
GWRE	71 Outperform	$19.87B	599.31	2.61%	―	18.61%	―
PCTY	71 Outperform	$9.69B	44.17	19.70%	―	14.63%	17.15%
PAYC	71 Outperform	$12.88B	33.55	24.99%	0.67%	9.86%	-14.34%
Sector *	63 Neutral	$32.92B	6.79	-11.98%	1.89%	5.66%	-22.06%

Guidewire Corporate Events

Guidewire Appoints Jeff Sloan to Board of Directors

Guidewire Software, Inc. appointed Jeff Sloan to its Board of Directors effective January 21, 2025. With his extensive leadership experience in the financial services and technology industries, particularly from his time as CEO of Global Payments Inc., Sloan is expected to provide valuable insight and perspective to Guidewire as it continues to grow and innovate its cloud platform for P&C insurers.