Overall GWRE gets a fundamental rating of 5 out of 10. We evaluated GWRE against 278 industry peers in the Software industry. GWRE has an excellent financial health rating, but there are some minor concerns on its profitability. GWRE is valued quite expensively, but it does show have an excellent growth rating.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year GWRE was profitable.
In the past year GWRE had a positive cash flow from operations.
GWRE had negative earnings in 4 of the past 5 years.
GWRE had a positive operating cash flow in 4 of the past 5 years.

1.2 Ratios

GWRE has a Return On Assets of 3.48%. This is in the better half of the industry: GWRE outperforms 67.27% of its industry peers.
Looking at the Return On Equity, with a value of 6.00%, GWRE is in the better half of the industry, outperforming 69.42% of the companies in the same industry.
GWRE has a Return On Invested Capital of 2.26%. This is in the better half of the industry: GWRE outperforms 66.91% of its industry peers.

		Industry Rank	Sector Rank
ROA	3.48%
ROE	6%
ROIC	2.26%

ROA(3y)-1.07%

ROA(5y)-2.81%

ROE(3y)-1.66%

ROE(5y)-4.34%

ROIC(3y)N/A

ROIC(5y)N/A

1.3 Margins

GWRE's Profit Margin of 7.23% is fine compared to the rest of the industry. GWRE outperforms 66.91% of its industry peers.
GWRE has a Operating Margin of 5.05%. This is in the better half of the industry: GWRE outperforms 67.99% of its industry peers.
Looking at the Gross Margin, with a value of 63.13%, GWRE is in line with its industry, outperforming 40.65% of the companies in the same industry.
In the last couple of years the Gross Margin of GWRE has grown nicely.

		Industry Rank	Sector Rank
OM	5.05%
PM (TTM)	7.23%
GM	63.13%

OM growth 3YN/A

OM growth 5YN/A

PM growth 3YN/A

PM growth 5YN/A

GM growth 3Y10.45%

GM growth 5Y2.8%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so GWRE is destroying value.
Compared to 1 year ago, GWRE has more shares outstanding
The number of shares outstanding for GWRE has been increased compared to 5 years ago.
GWRE has a worse debt/assets ratio than last year.

2.2 Solvency

An Altman-Z score of 7.22 indicates that GWRE is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 7.22, GWRE belongs to the top of the industry, outperforming 83.45% of the companies in the same industry.
GWRE has a debt to FCF ratio of 2.50. This is a good value and a sign of high solvency as GWRE would need 2.50 years to pay back of all of its debts.
The Debt to FCF ratio of GWRE (2.50) is better than 65.47% of its industry peers.
A Debt/Equity ratio of 0.44 indicates that GWRE is not too dependend on debt financing.
GWRE has a Debt to Equity ratio of 0.44. This is in the lower half of the industry: GWRE underperforms 64.03% of its industry peers.
Although GWRE does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.

		Industry Rank	Sector Rank
Debt/Equity	0.44
Debt/FCF	2.5
Altman-Z	7.22

ROIC/WACC0.21

WACC10.91%

2.3 Liquidity

A Current Ratio of 3.48 indicates that GWRE has no problem at all paying its short term obligations.
GWRE has a Current ratio of 3.48. This is in the better half of the industry: GWRE outperforms 77.70% of its industry peers.
A Quick Ratio of 3.48 indicates that GWRE has no problem at all paying its short term obligations.
GWRE has a better Quick ratio (3.48) than 77.70% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	3.48
Quick Ratio	3.48

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

The Earnings Per Share has grown by an impressive 63.28% over the past year.
The Earnings Per Share has been growing by 16.12% on average over the past years. This is quite good.
GWRE shows a strong growth in Revenue. In the last year, the Revenue has grown by 22.80%.
The Revenue has been growing by 10.13% on average over the past years. This is quite good.

EPS 1Y (TTM)63.28%

EPS 3YN/A

EPS 5Y16.12%

EPS Q2Q%53.49%

Revenue 1Y (TTM)22.8%

Revenue growth 3Y13.95%

Revenue growth 5Y10.13%

Sales Q2Q%26.53%

3.2 Future

The Earnings Per Share is expected to grow by 21.41% on average over the next years. This is a very strong growth
Based on estimates for the next years, GWRE will show a quite strong growth in Revenue. The Revenue will grow by 15.55% on average per year.

EPS Next Y13.23%

EPS Next 2Y21.69%

EPS Next 3Y21.51%

EPS Next 5Y21.41%

Revenue Next Year19.37%

Revenue Next 2Y17.44%

Revenue Next 3Y16.5%

Revenue Next 5Y15.55%

3.3 Evolution

The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.

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4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 48.71, which means the current valuation is very expensive for GWRE.
GWRE's Price/Earnings ratio is in line with the industry average.
The average S&P500 Price/Earnings ratio is at 28.32. GWRE is valued rather expensively when compared to this.
GWRE is valuated quite expensively with a Price/Forward Earnings ratio of 35.73.
GWRE's Price/Forward Earnings is on the same level as the industry average.
GWRE's Price/Forward Earnings ratio indicates a valuation a bit more expensive than the S&P500 average which is at 25.57.

		Industry Rank	Sector Rank
PE	48.71
Fwd PE	35.73

4.2 Price Multiples

The rest of the industry has a similar Enterprise Value to EBITDA ratio as GWRE.
The rest of the industry has a similar Price/Free Cash Flow ratio as GWRE.

		Industry Rank	Sector Rank
P/FCF	44.25
EV/EBITDA	125.49

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
A more expensive valuation may be justified as GWRE's earnings are expected to grow with 21.51% in the coming years.