Guidewire Software, Inc.
Guidewire Software, Inc. Fundamental Analysis
Guidewire Software, Inc. (GWRE) shows weak financial fundamentals with a PE ratio of 117.16, profit margin of 7.23%, and ROE of 6.54%. The company generates $1.3B in annual revenue with moderate year-over-year growth of 8.30%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 50.7/100 based on profitability, valuation, growth, and balance sheet metrics. The C grade reflects average fundamentals, with notable risks in certain areas.
Fundamental Health Score
We analyze GWRE's fundamental strength across five key dimensions:
Efficiency Score
WeakGWRE struggles to generate sufficient returns from assets.
Valuation Score
WeakGWRE trades at a premium to fair value.
Growth Score
ExcellentGWRE delivers strong and consistent growth momentum.
Financial Health Score
ExcellentGWRE maintains a strong and stable balance sheet.
Profitability Score
WeakGWRE struggles to sustain strong margins.
Key Financial Metrics
Is GWRE Expensive or Cheap?
P/E Ratio
GWRE trades at 117.16 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, GWRE's PEG of 3.74 indicates potential overvaluation.
Price to Book
The market values Guidewire Software, Inc. at 7.03 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 96.42 times EBITDA. This signals the market has high growth expectations.
How Well Does GWRE Make Money?
Net Profit Margin
For every $100 in sales, Guidewire Software, Inc. keeps $7.23 as profit after all expenses.
Operating Margin
Core operations generate 5.05 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $6.54 in profit for every $100 of shareholder equity.
ROA
Guidewire Software, Inc. generates $3.48 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Guidewire Software, Inc. produces operating cash flow of $296.61M, showing steady but balanced cash generation.
Free Cash Flow
Guidewire Software, Inc. generates strong free cash flow of $286.80M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $3.37 in free cash annually.
FCF Yield
GWRE converts 2.64% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
117.16
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
3.74
vs 25 benchmark
P/B Ratio
Price to book value ratio
7.03
vs 25 benchmark
P/S Ratio
Price to sales ratio
8.49
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.46
vs 25 benchmark
Current Ratio
Current assets to current liabilities
3.48
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.07
vs 25 benchmark
ROA
Return on assets percentage
0.03
vs 25 benchmark
ROCE
Return on capital employed
0.03
vs 25 benchmark
How GWRE Stacks Against Its Sector Peers
| Metric | GWRE Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 117.16 | 35.19 | Worse (Expensive) |
| ROE | 6.54% | 1155.00% | Weak |
| Net Margin | 7.23% | -127067.00% (disorted) | Weak |
| Debt/Equity | 0.46 | 0.41 | Neutral |
| Current Ratio | 3.48 | 4.71 | Strong Liquidity |
| ROA | 3.48% | -314918.00% (disorted) | Weak |
GWRE outperforms its industry in 1 out of 6 key metrics, but lagging in P/E Ratio.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Guidewire Software, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
36.92%
Industry Style: Growth, Innovation, High Beta
High GrowthEPS CAGR
-129.58%
Industry Style: Growth, Innovation, High Beta
DecliningFCF CAGR
69.36%
Industry Style: Growth, Innovation, High Beta
High Growth