GWRE gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 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.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

GWRE had positive earnings in the past year.
In the past year GWRE had a positive cash flow from operations.
In the past 5 years GWRE reported 4 times negative net income.
Of the past 5 years GWRE 4 years had a positive operating cash flow.

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.
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.
The Return On Invested Capital of GWRE (2.26%) is better than 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

With a decent Profit Margin value of 7.23%, GWRE is doing good in the industry, outperforming 66.91% of the companies in the same industry.
GWRE's Operating Margin of 5.05% is fine compared to the rest of the industry. GWRE outperforms 67.99% of its industry peers.
The Gross Margin of GWRE (63.13%) is comparable to the rest of the 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.
GWRE has more shares outstanding than it did 1 year ago.
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

GWRE has an Altman-Z score of 8.12. This indicates that GWRE is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of GWRE (8.12) is better than 85.25% of its industry peers.
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.
With a decent Debt to FCF ratio value of 2.50, GWRE is doing good in the industry, outperforming 65.47% of the companies in the same industry.
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 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	8.12

ROIC/WACC0.21

WACC10.95%

2.3 Liquidity

GWRE has a Current Ratio of 3.48. This indicates that GWRE is financially healthy and has no problem in meeting its short term obligations.
Looking at the Current 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.
A Quick Ratio of 3.48 indicates that GWRE has no problem at all paying its short term obligations.
GWRE has a Quick ratio of 3.48. This is in the better half of the industry: GWRE outperforms 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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3. Growth

3.1 Past

The Earnings Per Share has grown by an impressive 63.28% over the past year.
Measured over the past years, GWRE shows a quite strong growth in Earnings Per Share. The EPS has been growing by 16.12% on average per year.
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

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.
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

Based on the Price/Earnings ratio of 56.29, the valuation of GWRE can be described as expensive.
Compared to the rest of the industry, the Price/Earnings ratio of GWRE is on the same level as its industry peers.
When comparing the Price/Earnings ratio of GWRE to the average of the S&P500 Index (28.60), we can say GWRE is valued expensively.
Based on the Price/Forward Earnings ratio of 41.30, the valuation of GWRE can be described as expensive.
The rest of the industry has a similar Price/Forward Earnings ratio as GWRE.
The average S&P500 Price/Forward Earnings ratio is at 25.83. GWRE is valued rather expensively when compared to this.

		Industry Rank	Sector Rank
PE	56.29
Fwd PE	41.3

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of GWRE is on the same level as its industry peers.
GWRE's Price/Free Cash Flow is on the same level as the industry average.

		Industry Rank	Sector Rank
P/FCF	51.15
EV/EBITDA	144.24

4.3 Compensation for Growth

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