Guidewire (GWRE) AI Stock Analysis

• Market Cap: $21.11B
• Dividend Yield: N/A
• Average Volume (3M): 909.21K
• Price to Earnings (P/E): 636.5
• Beta (1Y): 0.98
• Revenue Growth: 18.61%
• EPS Growth: N/A
• Country: US
• Employees: 3,507
• Sector: Technology
• Sector Strength: 79
• Industry: Software - Application
• EPS (TTM): 0.88
• Shares Outstanding: 84,195,220
• 10 Day Avg. Volume: 1,471,687
• 30 Day Avg. Volume: 909,210
• PEG Ratio: 1.68
• Price to Book (P/B): 5.81
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 332.42
• Enterprise Value/Market Cap: 0.40
• Enterprise Value/Revenue: 1.98
• Enterprise Value/Gross Profit: 11.85
• Enterprise Value/Ebitda: 52.10
• 1Y Price Target: $257.23
• Price Target Upside: 1.60% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 15

• Rating: 71 Outperform
• Price Target: $277.00 ▲(9.41%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 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 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
	EBIT
21.79M	-52.57M	-149.49M	-199.45M	-105.58M	-23.89M
	EBITDA
71.85M	2.21M	-101.21M	-176.73M	-37.17M	36.26M
	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
920.44M	1.00B	798.68M	976.17M	1.12B	1.13B
	Total Assets
2.49B	2.23B	2.03B	2.27B	2.32B	2.36B
	Total Debt
706.71M	442.92M	440.14M	475.58M	459.20M	449.62M
	Net Debt
196.39M	-105.07M	38.33M	-130.73M	74.29M	82.65M
	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: Positive
• Last Price: 253.18
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Neutral

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 253.18 is above the 20-day moving average (MA) of 227.30, above the 50-day MA of 209.48, and above the 200-day MA of 191.98, indicating a bullish trend. The MACD of 12.81 indicates Negative momentum. The RSI at 75.77 is Negative, neither overbought nor oversold. The STOCH value of 77.96 is Neutral, 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	$14.64B	61.37	25.20%	0.58%	10.71%	-27.64%
PEGA	80 Outperform	$8.70B	49.41	39.29%	0.12%	14.29%	151.38%
PAYC	80 Outperform	$14.56B	35.95	24.99%	0.60%	9.86%	-14.34%
SSNC	77 Outperform	$20.04B	25.29	12.34%	1.23%	6.92%	28.43%
GWRE	71 Outperform	$21.11B	636.47	2.61%	―	18.61%	―
PCTY	71 Outperform	$10.28B	45.37	19.70%	―	14.63%	17.15%
Sector *	62 Neutral	$11.97B	10.08	-7.46%	2.96%	7.37%	-8.22%

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.