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New Lifetime High For Guidewire Software (GWRE)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Guidewire Software ( GWRE) as a new lifetime high candidate. In addition to specific proprietary factors, Trade-Ideas identified Guidewire Software as such a stock due to the following factors:

  • GWRE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $19.5 million.
  • GWRE has traded 71,607 shares today.
  • GWRE is trading at a new lifetime high.

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More details on GWRE:

Guidewire Software, Inc. provides system software to the property and casualty (P&C) insurance industry primarily in the United States, Canada, Australia, the United Kingdom, and internationally. GWRE has a PE ratio of 899.5. Currently there are 3 analysts that rate Guidewire Software a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Guidewire Software has been 425,000 shares per day over the past 30 days. Guidewire Software has a market cap of $3.5 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.67 and a short float of 5.4% with 8.46 days to cover. Shares are up 9.2% year-to-date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Guidewire Software as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share.

Highlights from the ratings report include:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.2%. Since the same quarter one year prior, revenues slightly increased by 5.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • GWRE has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 8.60, which clearly demonstrates the ability to cover short-term cash needs.
  • Compared to its closing price of one year ago, GWRE's share price has jumped by 46.85%, exceeding the performance of the broader market during that same time frame. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Software industry. The net income has significantly decreased by 2474.7% when compared to the same quarter one year ago, falling from $0.45 million to -$10.62 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Software industry and the overall market, GUIDEWIRE SOFTWARE INC's return on equity significantly trails that of both the industry average and the S&P 500.

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