Yahoo Finance Guidewire (GWRE) Gains 53% in a Year: Will the Trend Continue?
Guidewire Software GWRE is continuing its upward trajectory, with a gain of 52.8% in the past year compared with the S&P 500 Composite and sub-industry’s growth of 19.5% and 26.7%, respectively.
Guidewire is a provider of software solutions for P&C insurers. Its cloud platform boasts a trusted infrastructure with modular and interconnected cloud services to aid insurers in upgrading their core operations. The platform also has scalability as well as the ability to embed analytics and core workflows. The company updates its cloud platform thrice a year to keep the system agile and nimble amid a constantly evolving P&C industry.
With healthy fundamentals and strong growth opportunities, this Zacks Rank #2 (Buy) stock appears to be a solid investment option at the moment.
Apart from a favorable rank, GWRE has a Growth Score of A. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or 2 and a Growth Score of A or B offer solid investment opportunities.
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Factors Driving Growth
The focus on cloud strategy has been paying off for Guidewire, as evidenced by increasing sales. In the last reported quarter, the company’s total revenues of $240.9 million increased 4% year over year. The figure was in line with the Zacks Consensus Estimate.
In the fiscal second quarter, the Subscription and support segment’s revenues (54.7% of total revenues) soared 24.5% year over year to $131.6 million.
Guidewire Cloud has gained momentum with 11 cloud deals in the fiscal second quarter. Out of these 11 deals, 10 were for its InsuranceSuite cloud offering. Guidewire’s InsuranceSuite Cloud comprises three primary applications, namely PolicyCenter Cloud, BillingCenter Cloud and ClaimCenter Cloud.
It has increased its 2024 annual recurring revenues or ARR guidance from $846-$858 million to $852-$862 million owing to solid sales momentum and an improving competitive position. We expect the metric to be $855.4 million, which indicates an increase of 12.1% from the year-ago levels.
The company’s focus on enhancing the Guidewire Cloud platform with new capabilities, including digital frameworks, automation, tooling and other cloud services is expected to boost sales of subscription-based solutions in the long haul.
Management also remains focused on driving cloud operations efficiency to boost cloud margins. The Subscription and support segment’s gross margin rose to 65.1% from 57.4% on a year-over-year basis in the second quarter of fiscal 2024 due to increased cloud infrastructure efficiency.
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.
However, as the company invests more in its ecosystem of implementation partners, service revenues are getting affected. Management has lowered its 2024 revenue guidance to $957-$967 million compared with the previous guided range of $976-$986 million owing to a downward adjustment to its services revenue expectations.
A Look at Estimates
The Zacks Consensus Estimate for fiscal 2024 and 2025 revenues is pegged at $963.5 million and $1.08 billion, indicating growth of 6.4% and 11.8% from the year-ago levels, respectively.
The consensus estimate for fiscal 2024 and 2025 EPS is expected to rise 220% and 55.4% from the prior-year actuals to $1.12 and $1.74, respectively.
The consensus mark for fiscal 2024 and 2025 EPS has increased 4.7% and 3%, respectively, in the past 60 days, reflecting analysts’ optimism.
Stocks to Consider
Some other top-ranked stocks worth consideration in the broader technology space are Badger Meter BMI, Oracle ORCL and The Descartes Systems Group Inc DSGX. While BMI sports a Zacks Rank #1, ORCL and DSGX carry a Zacks Rank of 2 each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BMI’s 2024 EPS is pegged at $3.89, up 9.9% in the past 60 days. BMI’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 12.7%. The long-term earnings growth rate is 15.6%. Shares of BMI have risen 39.6% in the past year.
The Zacks Consensus Estimate for ORCL’s fiscal 2025 EPS is pegged at $6.15. The long-term earnings growth rate is 11.2%. Oracle’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 3.6%. Shares of ORCL have risen 22.3% in the past year.
The Zacks Consensus Estimate for Descartes’ fiscal 2025 EPS has increased 1.2% in the past 60 days to $1.69. Descartes' earnings beat the Zacks Consensus Estimate in two of the last four quarters while missing in the remaining two quarters, the average surprise being 5.1%. Shares of DSGX have risen 26.9% in the past year.
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Badger Meter, Inc. (BMI) : Free Stock Analysis Report
Oracle Corporation (ORCL) : Free Stock Analysis Report
Guidewire Software, Inc. (GWRE) : Free Stock Analysis Report
The Descartes Systems Group Inc. (DSGX) : Free Stock Analysis Report
