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Guidewire (GWRE) Stock Rises 49.6% in a Year: Here's How
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Guidewire Software (GWRE - Free Report) witnessed strong momentum in the past year. Shares of the company have gained 49.6% in the same time frame compared with the sub-industry’s growth of 29.4%.
The company is a leading provider of software solutions for property and casualty (P&C) insurers. Further, it offers Guidewire InsuranceSuite and Guidewire InsuranceNow, which provide solutions to support the entire insurance lifecycle.
Image Source: Zacks Investment Research
Catalysts Behind the Price Surge
Let’s delve deeper to unearth the factors working in favor of this Zacks Rank #3 (Hold) stock.
The company’s performance is gaining from higher revenue growth across the subscription and support business segment. We expect subscription and support revenues to witness 26.1% year-over-year growth in fiscal 2024.
Per a report from Fortune Business Insights, the global Software-as-a-Service market is expected to witness a CAGR of 18.4% between 2024 and 2032. This is expected to favor the company’s growth prospects.
The company’s focus on enhancing the Guidewire Cloud platform with new capabilities is expected to boost sales of subscription-based solutions. Guidewire Cloud continues to gain momentum with 11 cloud deals in the fiscal first quarter.
The company keeps fostering and expanding its network of partners, which includes SIs and solution providers, to drive sustained activity and greater value from the platform. Also, migration activity for InsuranceSuite Cloud is a major tailwind.
Apart from its solid fundamentals, the company is prone to a few risks. The company’s products and services are only meant for P&C insurers. This leads to a lack of product diversification. Also, frequent acquisitions made by the company lead to rising integration risks.
A Look at Estimates
The company’s earnings are expected to increase 165.7% and 78.7% on a year-over-year basis in fiscal 2024 and 2025, respectively.
GWRE’s fiscal 2024 and 2025 revenues are anticipated to rise 7.1% and 11.9% year over year, respectively.
Guidewire has an average brokerage recommendation (ABR) of 1.6 on a scale of 1 to 5 (Strong Buy to Strong Sell). ABR is the calculated average of actual recommendations made by brokerage firms and portends the future potential of the stock.
Stable Solvency Structure
Guidewire portrays a strong balance sheet. As of Oct 31, 2023, cash and cash equivalents and short-term investments were $712.9 million compared with long-term investments (convertible senior notes) of $397.6 million.
The solid liquidity position reflects that the company is making investments in the right direction, and the excess cash will be used for pursuing strategic acquisitions, investing in growth initiatives and carrying out distribution to shareholders.
For fiscal 2024, the company expects cash flow from operations in the range of $115-$135 million compared with the previous guidance of $95-$125 million.
The Zacks Consensus Estimate for Synopsys’ 2024 earnings per share (EPS) has improved 1.1% in the past 60 days to $13.56. SNPS’ long-term earnings growth rate is 17.5%.
Synopsys’ earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, delivering an average surprise of 4.1%. Shares of SNPS have risen 51.7% in the past year.
The Zacks Consensus Estimate for Woodward’s fiscal 2024 EPS has inched up 5.7% in the past 60 days to $5.27. WWD’s long-term earnings growth rate is 15.5%.
Woodward’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, delivering an average surprise of 27.2%. Shares of WWD have risen 55% in the past year.
The Zacks Consensus Estimate for Perion Network’s fiscal 2024 EPS has improved 0.6% in the past 60 days to $3.34. PERI’s long-term earnings growth rate is 22%.
The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 12.9%. Shares of PERI have lost 34.2% in the past year.
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Guidewire (GWRE) Stock Rises 49.6% in a Year: Here's How
Guidewire Software (GWRE - Free Report) witnessed strong momentum in the past year. Shares of the company have gained 49.6% in the same time frame compared with the sub-industry’s growth of 29.4%.
The company is a leading provider of software solutions for property and casualty (P&C) insurers. Further, it offers Guidewire InsuranceSuite and Guidewire InsuranceNow, which provide solutions to support the entire insurance lifecycle.
Image Source: Zacks Investment Research
Catalysts Behind the Price Surge
Let’s delve deeper to unearth the factors working in favor of this Zacks Rank #3 (Hold) stock.
The company’s performance is gaining from higher revenue growth across the subscription and support business segment. We expect subscription and support revenues to witness 26.1% year-over-year growth in fiscal 2024.
Per a report from Fortune Business Insights, the global Software-as-a-Service market is expected to witness a CAGR of 18.4% between 2024 and 2032. This is expected to favor the company’s growth prospects.
The company’s focus on enhancing the Guidewire Cloud platform with new capabilities is expected to boost sales of subscription-based solutions. Guidewire Cloud continues to gain momentum with 11 cloud deals in the fiscal first quarter.
The company keeps fostering and expanding its network of partners, which includes SIs and solution providers, to drive sustained activity and greater value from the platform. Also, migration activity for InsuranceSuite Cloud is a major tailwind.
Apart from its solid fundamentals, the company is prone to a few risks. The company’s products and services are only meant for P&C insurers. This leads to a lack of product diversification. Also, frequent acquisitions made by the company lead to rising integration risks.
A Look at Estimates
The company’s earnings are expected to increase 165.7% and 78.7% on a year-over-year basis in fiscal 2024 and 2025, respectively.
GWRE’s fiscal 2024 and 2025 revenues are anticipated to rise 7.1% and 11.9% year over year, respectively.
Guidewire has an average brokerage recommendation (ABR) of 1.6 on a scale of 1 to 5 (Strong Buy to Strong Sell). ABR is the calculated average of actual recommendations made by brokerage firms and portends the future potential of the stock.
Stable Solvency Structure
Guidewire portrays a strong balance sheet. As of Oct 31, 2023, cash and cash equivalents and short-term investments were $712.9 million compared with long-term investments (convertible senior notes) of $397.6 million.
The solid liquidity position reflects that the company is making investments in the right direction, and the excess cash will be used for pursuing strategic acquisitions, investing in growth initiatives and carrying out distribution to shareholders.
For fiscal 2024, the company expects cash flow from operations in the range of $115-$135 million compared with the previous guidance of $95-$125 million.
Stocks to Consider
Some better-ranked stocks from the broader technology space are Synopsys (SNPS - Free Report) , Woodward (WWD - Free Report) and Perion Network (PERI - Free Report) . Synopsys sports a Zacks Rank #1 (Strong Buy) at present, while Woodward and Perion Network carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Synopsys’ 2024 earnings per share (EPS) has improved 1.1% in the past 60 days to $13.56. SNPS’ long-term earnings growth rate is 17.5%.
Synopsys’ earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, delivering an average surprise of 4.1%. Shares of SNPS have risen 51.7% in the past year.
The Zacks Consensus Estimate for Woodward’s fiscal 2024 EPS has inched up 5.7% in the past 60 days to $5.27. WWD’s long-term earnings growth rate is 15.5%.
Woodward’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, delivering an average surprise of 27.2%. Shares of WWD have risen 55% in the past year.
The Zacks Consensus Estimate for Perion Network’s fiscal 2024 EPS has improved 0.6% in the past 60 days to $3.34. PERI’s long-term earnings growth rate is 22%.
The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 12.9%. Shares of PERI have lost 34.2% in the past year.