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Guidewire (GWRE) Stock Rises 39.5% 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 39.5% in the same time frame compared with the sub-industry’s growth of 17.8%.
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
This Zacks Rank #3 (Hold) company’s performance is gaining from higher revenue growth across the subscription and support business segments. We expect subscription and support revenues to witness 26.1% year-over-year growth in fiscal 2024.
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 is slowly shifting from the term license-based model to a subscription base. This is likely to be beneficial for the company in the long run as the majority of enterprises are expected to lean toward cloud-based infrastructure in the future.
Apart from this, the company is benefiting from the rapid uptake of its InsuranceSuite and PolicyCenter by leading insurance companies. In March, the company announced United Automobile Insurance Company successfully migrated Guidewire ClaimCenter from an on-premise environment to GWRE’s Cloud to boost its claims and related IT operations.
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.
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 220% and 55.4% on a year-over-year basis in fiscal 2024 and 2025, respectively.
GWRE’s fiscal 2024 and 2025 revenues are anticipated to rise 6.4% and 11.8% 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.
The Zacks Consensus Estimate for Synopsys’ 2024 earnings per share (EPS) has decreased 0.7% in the past 60 days to $13.28. SNPS’s 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%. SNPS shares have risen 56.1% in the past year.
The Zacks Consensus Estimate for PINS’s 2024 EPS has increased 0.7% in the past 60 days to $1.34.
Pinterest’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, delivering an average earnings surprise of 37.4%. Shares of PINS have gained 13% in the past year.
The Zacks Consensus Estimate for IRDM’s 2024 EPS has increased 213% in the past 60 days to 72 cents.
Iridium’s earnings beat the Zacks Consensus Estimate in two of the last four quarters, delivering an average earnings surprise of 91.7%. Shares of IRDM have lost 56.1% in the past year.
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Guidewire (GWRE) Stock Rises 39.5% in a Year: Here's How
Guidewire Software (GWRE - Free Report) witnessed strong momentum in the past year. Shares of the company have gained 39.5% in the same time frame compared with the sub-industry’s growth of 17.8%.
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
This Zacks Rank #3 (Hold) company’s performance is gaining from higher revenue growth across the subscription and support business segments. We expect subscription and support revenues to witness 26.1% year-over-year growth in fiscal 2024.
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 is slowly shifting from the term license-based model to a subscription base. This is likely to be beneficial for the company in the long run as the majority of enterprises are expected to lean toward cloud-based infrastructure in the future.
Apart from this, the company is benefiting from the rapid uptake of its InsuranceSuite and PolicyCenter by leading insurance companies. In March, the company announced United Automobile Insurance Company successfully migrated Guidewire ClaimCenter from an on-premise environment to GWRE’s Cloud to boost its claims and related IT operations.
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.
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 220% and 55.4% on a year-over-year basis in fiscal 2024 and 2025, respectively.
GWRE’s fiscal 2024 and 2025 revenues are anticipated to rise 6.4% and 11.8% 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.
Stocks to Consider
Some better-ranked stocks from the broader technology space are Synopsys (SNPS - Free Report) , Pinterest (PINS - Free Report) and Iridium Communications (IRDM - Free Report) . Each stock presently sports a Zacks Rank #1 (Strong 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 decreased 0.7% in the past 60 days to $13.28. SNPS’s 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%. SNPS shares have risen 56.1% in the past year.
The Zacks Consensus Estimate for PINS’s 2024 EPS has increased 0.7% in the past 60 days to $1.34.
Pinterest’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, delivering an average earnings surprise of 37.4%. Shares of PINS have gained 13% in the past year.
The Zacks Consensus Estimate for IRDM’s 2024 EPS has increased 213% in the past 60 days to 72 cents.
Iridium’s earnings beat the Zacks Consensus Estimate in two of the last four quarters, delivering an average earnings surprise of 91.7%. Shares of IRDM have lost 56.1% in the past year.