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Guidewire Software, Inc. (GWRE) Hit a 52 Week High, Can the Run Continue?
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Have you been paying attention to shares of Guidewire Software (GWRE - Free Report) ? Shares have been on the move with the stock up 8.2% over the past month. The stock hit a new 52-week high of $187.85 in the previous session. Guidewire Software has gained 70.4% since the start of the year compared to the 26.4% move for the Zacks Computer and Technology sector and the 16.9% return for the Zacks Business - Software Services industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on September 5, 2024, Guidewire Software reported EPS of $0.62 versus consensus estimate of $0.52 while it beat the consensus revenue estimate by 2.95%.
For the current fiscal year, Guidewire Software is expected to post earnings of $1.98 per share on $1.14 billion in revenues. This represents a 46.67% change in EPS on a 16.75% change in revenues. For the next fiscal year, the company is expected to earn $2.48 per share on $1.3 billion in revenues. This represents a year-over-year change of 25.54% and 13.65%, respectively.
Valuation Metrics
Guidewire Software may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Guidewire Software has a Value Score of F. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 94.1X current fiscal year EPS estimates, which is a premium to the peer industry average of 33X. On a trailing cash flow basis, the stock currently trades at 555.3X versus its peer group's average of 31.1X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Guidewire Software currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Guidewire Software passes the test. Thus, it seems as though Guidewire Software shares could have a bit more room to run in the near term.
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Guidewire Software, Inc. (GWRE) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of Guidewire Software (GWRE - Free Report) ? Shares have been on the move with the stock up 8.2% over the past month. The stock hit a new 52-week high of $187.85 in the previous session. Guidewire Software has gained 70.4% since the start of the year compared to the 26.4% move for the Zacks Computer and Technology sector and the 16.9% return for the Zacks Business - Software Services industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on September 5, 2024, Guidewire Software reported EPS of $0.62 versus consensus estimate of $0.52 while it beat the consensus revenue estimate by 2.95%.
For the current fiscal year, Guidewire Software is expected to post earnings of $1.98 per share on $1.14 billion in revenues. This represents a 46.67% change in EPS on a 16.75% change in revenues. For the next fiscal year, the company is expected to earn $2.48 per share on $1.3 billion in revenues. This represents a year-over-year change of 25.54% and 13.65%, respectively.
Valuation Metrics
Guidewire Software may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Guidewire Software has a Value Score of F. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 94.1X current fiscal year EPS estimates, which is a premium to the peer industry average of 33X. On a trailing cash flow basis, the stock currently trades at 555.3X versus its peer group's average of 31.1X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Guidewire Software currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Guidewire Software passes the test. Thus, it seems as though Guidewire Software shares could have a bit more room to run in the near term.