GUIDEWIRE SOFTWARE INC (GWRE) Stock Fundamental Analysis
USA - New York Stock Exchange - NYSE:GWRE - US40171V1008 - Common Stock
160.29 USD
-1.6 (-0.99%)
We assign a fundamental rating of 5 out of 10 to GWRE. GWRE was compared to 278 industry peers in the Software industry. While GWRE has a great health rating, its profitability is only average at the moment. GWRE is valued quite expensively, but it does show have an excellent growth rating.
1. Profitability
1.1 Basic Checks
- GWRE had positive earnings in the past year.
- GWRE had a positive operating cash flow in the past year.
- 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
- With a decent Return On Assets value of 3.48%, GWRE is doing good in the industry, outperforming 67.27% of the companies in the same industry.
- GWRE's Return On Equity of 6.00% is fine compared to the rest of the industry. GWRE outperforms 69.42% of its industry peers.
- GWRE's Return On Invested Capital of 2.26% is fine compared to the rest 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
- Looking at the Profit Margin, with a value of 7.23%, GWRE is in the better half of the industry, outperforming 66.91% of the companies in the same industry.
- The Operating Margin of GWRE (5.05%) is better than 67.99% of its industry peers.
- With a Gross Margin value of 63.13%, GWRE perfoms like the industry average, outperforming 40.65% of the companies in the same industry.
- GWRE's Gross Margin has improved in the last couple of years.
| 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%
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
- Compared to 5 years ago, GWRE has more shares outstanding
- Compared to 1 year ago, GWRE has a worse debt to assets ratio.
2.2 Solvency
- GWRE has an Altman-Z score of 8.19. This indicates that GWRE is financially healthy and has little risk of bankruptcy at the moment.
- GWRE has a Altman-Z score of 8.19. This is amongst the best in the industry. GWRE outperforms 85.25% of its industry peers.
- The Debt to FCF ratio of GWRE is 2.50, which is a good value as it means it would take GWRE, 2.50 years of fcf income to pay off all of its debts.
- GWRE's Debt to FCF ratio of 2.50 is fine compared to the rest of the industry. GWRE outperforms 65.47% of its industry peers.
- GWRE has a Debt/Equity ratio of 0.44. This is a healthy value indicating a solid balance between debt and equity.
- GWRE has a worse Debt to Equity ratio (0.44) than 63.67% 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 | 8.19 |
ROIC/WACC0.21
WACC10.95%
2.3 Liquidity
- A Current Ratio of 3.48 indicates that GWRE has no problem at all paying its short term obligations.
- GWRE's Current ratio of 3.48 is fine compared to the rest of the industry. GWRE outperforms 77.70% of its industry peers.
- GWRE has a Quick Ratio of 3.48. This indicates that GWRE is financially healthy and has no problem in meeting its short term obligations.
- Looking at the Quick ratio, with a value of 3.48, GWRE is in the better half of the industry, outperforming 77.70% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 3.48 | ||
| Quick Ratio | 3.48 |
3. Growth
3.1 Past
- The Earnings Per Share has grown by an impressive 63.28% over the past year.
- GWRE shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 16.12% yearly.
- The Revenue has grown by 22.80% in the past year. This is a very strong growth!
- GWRE shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 10.13% yearly.
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
- GWRE is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 21.41% yearly.
- GWRE is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 15.55% yearly.
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.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
4. Valuation
4.1 Price/Earnings Ratio
- GWRE is valuated quite expensively with a Price/Earnings ratio of 55.46.
- GWRE's Price/Earnings is on the same level as the industry average.
- The average S&P500 Price/Earnings ratio is at 27.25. GWRE is valued rather expensively when compared to this.
- With a Price/Forward Earnings ratio of 40.69, GWRE can be considered very expensive at the moment.
- Compared to the rest of the industry, the Price/Forward Earnings ratio of GWRE is on the same level as its industry peers.
- GWRE is valuated expensively when we compare the Price/Forward Earnings ratio to 25.98, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 55.46 | ||
| Fwd PE | 40.69 |
4.2 Price Multiples
- GWRE's Enterprise Value to EBITDA ratio is in line with the industry average.
- The rest of the industry has a similar Price/Free Cash Flow ratio as GWRE.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 50.39 | ||
| EV/EBITDA | 145.78 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates GWRE does not grow enough to justify the current Price/Earnings ratio.
- GWRE's earnings are expected to grow with 21.51% in the coming years. This may justify a more expensive valuation.
PEG (NY)4.19
PEG (5Y)3.44
EPS Next 2Y21.69%
EPS Next 3Y21.51%
5. Dividend
5.1 Amount
- GWRE does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0% |
GUIDEWIRE SOFTWARE INC / GWRE FAQ
Can you provide the ChartMill fundamental rating for GUIDEWIRE SOFTWARE INC?
ChartMill assigns a fundamental rating of 5 / 10 to GWRE.
Can you provide the valuation status for GUIDEWIRE SOFTWARE INC?
ChartMill assigns a valuation rating of 2 / 10 to GUIDEWIRE SOFTWARE INC (GWRE). This can be considered as Overvalued.
What is the profitability of GWRE stock?
GUIDEWIRE SOFTWARE INC (GWRE) has a profitability rating of 4 / 10.
What is the valuation of GUIDEWIRE SOFTWARE INC based on its PE and PB ratios?
The Price/Earnings (PE) ratio for GUIDEWIRE SOFTWARE INC (GWRE) is 55.46 and the Price/Book (PB) ratio is 8.89.
Can you provide the financial health for GWRE stock?
The financial health rating of GUIDEWIRE SOFTWARE INC (GWRE) is 7 / 10.