Guidewire (GWRE) AI Stock Analysis

• Market Cap: $21.20B
• Dividend Yield: N/A
• Average Volume (3M): 901.91K
• Price to Earnings (P/E): 639.3
• Beta (1Y): 0.98
• Revenue Growth: 18.61%
• EPS Growth: N/A
• Country: US
• Employees: 3,507
• Sector: Technology
• Sector Strength: 82
• Industry: Software - Application
• EPS (TTM): 0.88
• Shares Outstanding: 84,195,220
• 10 Day Avg. Volume: 1,508,649
• 30 Day Avg. Volume: 901,910
• PEG Ratio: 21.40
• Price to Book (P/B): 9.20
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 69.68
• Enterprise Value/Market Cap: 0.58
• Enterprise Value/Revenue: 2.89
• Enterprise Value/Gross Profit: 17.33
• Enterprise Value/Ebitda: 76.14
• 1Y Price Target: $257.23
• Price Target Upside: 2.18% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 15

• Rating: 59 Neutral
• Price Target: $266.00 ▲(5.66%Upside)

Guidewire's overall stock score reflects robust financial performance in terms of revenue growth and strategic positioning highlighted in the earnings call. However, the stock's overvaluation and technical indicators suggesting it's overbought weigh down the overall score. The lack of dividend yield and high P/E ratio further contribute to the cautious outlook.

Positive Factors

Cloud Migrations

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.

Revenue Growth

Total revenue grew 22% beating the high end of the guidance and ahead of consensus by 2 pts.

Negative Factors

Projected Decline

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

Stock Rating

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

Valuation Concerns

The stock is trading at a lofty multiple of 14.5x FY 26 EV/S and expecting growth to moderate in FY26.

Guidewire Business Overview & Revenue Model

Company Description

Guidewire Software, Inc. provides software products for property and casualty insurers worldwide. The company offers Guidewire InsuranceSuite comprising Guidewire PolicyCenter, BillingCenter, and ClaimCenter applications. It also provides Guidewire InsuranceNow, a cloud-based platform that offers policy, billing, and claims management functionality to insurers; and Guidewire InsuranceSuite for Self-Managed. In addition, the company offers Guidewire Rating Management to manage the pricing of insurance products; Guidewire Reinsurance Management to use rules-based logic to execute reinsurance strategy through underwriting and claims processes; Guidewire Client Data Management to capitalize on customer information; and Guidewire Product Content Management that offers software tools and standards-based line-of-business templates to introduce and modify products. Further, it provides Guidewire Underwriting Management, a cloud-based integrated business application; Guidewire AppReader, a submission intake management solution; Guidewire ClaimCenter Package for the London market supports the claims workflow used by London Market insurers and brokers; Guidewire Digital Engagement Applications, which enable insurers to provide digital experiences to customers, agents, vendors, and field personnel through their device of choice; and Guidewire for Salesforce to provide customer information regarding policies and claims. Additionally, the company offers Guidewire Predictive Analytics, a set of cloud-native applications; Guidewire Risk Insights that allows insurers to assess new and evolving risks; Guidewire Business Intelligence that allows insurers to measure business performance; Guidewire DataHub, an operational data store; and Guidewire InfoCenter, a business intelligence warehouse, as well as implementation and integration, and professional services. The company was founded in 2001 and is headquartered in San Mateo, California.

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 exhibits robust revenue growth and maintains a stable balance sheet with manageable leverage. However, ongoing profitability issues and negative net income hinder its financial performance. Improving margins and sustaining positive cash flow growth are critical for future financial health.

Income Statement

Guidewire's revenue growth is evident with a TTM increase of 10.6% compared to the previous year. However, the company has struggled with profitability, as reflected in negative net income across multiple periods, and a modest EBIT margin of 0.07% in the TTM. EBITDA margin has also been negative, impacting overall profitability.

Balance Sheet

The company maintains a stable balance sheet with a debt-to-equity ratio of 0.70 in the TTM, indicating moderate leverage. The equity ratio is 49.9%, suggesting a balanced capital structure. However, the negative ROE of -1.33% highlights profitability challenges.

Cash Flow

Guidewire's cash flow has shown improvement, with positive free cash flow growth in the TTM. The operating cash flow to net income ratio is positive, demonstrating effective cash generation relative to net income. However, the free cash flow to net income ratio needs enhancement due to persistent net losses.

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
	EBIT
21.79M	-52.57M	-149.49M	-199.45M	-105.58M	-6.39M
	EBITDA
71.85M	2.21M	-101.21M	-161.43M	-37.17M	46.16M
	Net Income Common Stockholders
34.61M	-6.10M	-111.86M	-180.43M	-66.51M	-27.20M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.17B	1.00B	798.68M	976.17M	1.12B	1.13B
	Total Assets
2.54B	2.23B	2.03B	2.27B	2.32B	2.36B
	Total Debt
885.78M	442.92M	440.14M	475.58M	459.20M	449.62M
	Net Debt
188.29M	-105.07M	38.33M	-130.73M	74.29M	82.65M
	Total Liabilities
1.27B	883.56M	828.42M	815.24M	776.95M	708.08M
	Stockholders Equity
1.27B	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: Positive
• Last Price: 251.74
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GWRE, the sentiment is Positive. The current price of 251.74 is above the 20-day moving average (MA) of 223.69, above the 50-day MA of 207.01, and above the 200-day MA of 190.94, indicating a bullish trend. The MACD of 12.64 indicates Negative momentum. The RSI at 77.39 is Negative, neither overbought nor oversold. The STOCH value of 85.55 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GWRE.

Guidewire Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BSY	81 Outperform	$14.55B	60.97	25.20%	0.52%	10.71%	-27.64%
PEGA	80 Outperform	$8.77B	49.82	39.29%	0.12%	14.29%	151.38%
PAYC	80 Outperform	$14.69B	36.28	24.99%	0.58%	9.86%	-14.34%
SSNC	78 Outperform	$20.18B	25.47	12.34%	1.22%	6.92%	28.43%
PCTY	71 Outperform	$10.33B	46.61	19.70%	―	14.63%	17.15%
Sector *	62 Neutral	$11.90B	10.64	-7.50%	2.90%	7.41%	-8.19%
GWRE	59 Neutral	$21.20B	639.26	2.61%	―	18.61%	―

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.