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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Guidewire Software, Inc. (XNYS:GWRE) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
GWRE
Name:
GUIDEWIRE SOFTWARE, INC. (XNYS:GWRE)
Sector:
- 114158.00K
Industry:
Software�Application
CEO:
Mr. Michael Rosenbaum
Total Employees:
2,942
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -111.07% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF GUIDEWIRE SOFTWARE, INC.(GWRE) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND SOFTWARE�APPLICATION INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
68.51
One Month Price Target:
$69.01
Six Month Price Target :
$71.52
Likely Price in One Year's Time:
Ticker:
$74.53
Likely Trading Range Today Under (Normal Volatility)
$68.22
Price Upper limit ($) :
$68.75
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$65.27
This week:
$61.27
This month :
$54.02
Other Primary facts
Market Cap:
5.63B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
83.82M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
10.71%
-16.82%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$83.56
$76.78
$53.46
$60.24
Medium risk (<10%) entry points
Buy Call
Sell Call
$74.57
Buy Put:
Sell Put:
$73.13
$62.43
$63.89
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
GWRE
Sharpe Ratio:
-2.10%
Comparison:
GWRE, is amongst the top 40% stocks with lowest risk-adjusted returns
Sharpe ratio is -317.46% lower than the industry
& is -191.96% lower than the market/S&P 500 average
Average Returns/Yield of
GWRE
Daily returns:
-0.04%
Weekly returns:
-0.20%
Monthly returns:
-0.78%
Yearly returns:
9.94%
Comparison of returns:
Average annual returns/yield (last 3 years) is -194.21% below industry average
Classification:
GWRE, is amongst the top 40% lowest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.49
Statistical test of Returns:
GWRE has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.28%
Weekly Volatility:
5.11%
Monthly Volatility:
10.21%
Yearly Volatility:
35.37%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.96%
Volatility in last five trading days has been -14.28% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-4.73%
Weekly VaR:
-10.57%
Monthly VaR:
-21.14%
How Much Can the price of
GWRE
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-19%
Worst case (decline):
-73.24%
This translates to price declining to:
$55.39
This translates to price declining to:
$18.33
Severe Crash Probability
Risk of crash in next 6/12 months: Low (<25%)
What is Value at Risk (VaR)?
Risk Fundamentals
GWRE is a 49.23% riskier investment compared to the market/S&P 500 & is 27.85% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -36.49% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
GWRE
Beta in relation to market/S&P 500--1.31
Expected beta in 1 year's time:
0.805
Expected beta in 3 year's time:
1.138
Unlevered (debt free) Beta:
1.021
Beta in relation to Nasdaq (XNAS):
0.874
Beta in relation to all global stocks::
0.571
Beta Comparison & Analysis
Beta of competitors/peers::
1.432
Beta is -8.68% lower than peers
Average Industry Beta:
1.335
Beta is -2.09% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
-
-
Alpha provided | Alpha Analysis
Alpha provided:
-0.215
Alpha is 809.31% above industry average alpha yield
Alpha is -1367% below the market average
Analysis of Cost of Capital of
GWRE
Equity cost of capital:
0.121
Equity cost of capital is -1.55% below industry mean WACC
Unlevered (without debt) cost of capital:
9.45%
Before-tax cost of debt:
2.24%
After-tax cost of debt:
1.77%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
1.77%
WACC is 9.08% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$9.51
Revenue growth rate per share of (3Y):
3.83
Annual revenue growth rate is -96.24% below industry average
EPS:
-$1.80
Expected Annual growth rate of EPS (3Y):
0.00%
-
Free cash flow (FCF) per share:
$1.00
-
-
Debt per share
$5.48
EBITDA per share
-$1.66
Valuation Analysis Today of
GWRE
P/E Ratio:
0
P/E Ratio of Competitors/Peers:
14.57
P/E ratio is -100.00% lower than main peers & is higher than the industry
-
GWRE is -121.43% undervalued if valued using industry average P/E ratio
-
-
P/S (Price to Sales ratio):
7.2
Price to sales ratio is -37.22% below the industry mean
P/B (Price to book value ratio):
3.83
Price to free cash flow: 68.31
-
Net income growth rate (3Y):
214.46%
Net income growth rate is -12.17% lower than the industry average net income growth rate
Dividend Analysis
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Dividend History:
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
30.68%
Net debt to equity ratio:
15.44%
Debt to assets ratio:
21.10%
Net debt to assets ratio:
10.62%
Debt-to-asset ratio is -61.54% below industry average
Ability to repay debt:
Interest coverage ratio:
-13.16
Interest coverage ratio is -124.77% less than industry average
Looking forward:
Debt growth rate:
2.23%
Annual debt growth is -100% lower than industry average debt growth rate
Debt repayment rate in last quarter: 0.00%
Analysis of Key Statistics
Correlation of price movement with the market:
0.645
Statistical significance of correlation:
GWRE has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.503
Stock price is 28.14% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.503
Correlation of price movement with Nasdaq (^IXIC):
-0.008
Covariance of price movement with the market:
-0.01
Kurtosis
5.318
Returns have moderate fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.608
Returns are left (negative) skewed; mean returns are lower than median and mode returns
Fundamental Analysis & Dupont Analysis of
GWRE
Gross Profit Margin Ratio:
180%
Operating Profit Margin Ratio:
-20.98%
Operating profit margin is 9.50% higher than the industry
Net Profit Margin Ratio:
180%
Effective Tax Rate:
8.54%
Effective tax rate is -67.63% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
-10.04%
Return on equity (ROE) is -23.24% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
-6.91%
Return on assets (ROA) is 79.81% higher than the industry
Financial Leverage:
1.3x
Current Ratio:
5.29
Current ratio is 76.70% above industry average
Cash Conversion Cycle (days):
56.8
Cash conversion cycle is -40.03% below industry average
The remaining useful life of property plant & equipment is: 1.3 years
Stock based compensation to net income ratio:
-21.43%
In-depth Efficiency Analysis
Revenue generated per employee:
271.1K
Each employee generates -22% less revenue than industry average revenue per employee
EBITDA generated per employee:
- 47.2K
Each employee generates -539% less EBITDA than industry average revenue per employee
Profit generated per employee:
- 51.1K
Each employee generates 193% more net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
- 38.8K
Each employee generates 400% more free cash flow than industry average revenue per employee
Assets/Capital per employee
373.1K
Each employee generates 400% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
Research & development (R&D) investment growth rate-- 9.43%
Growth rate in R&D investment/expenditure is 516.95% higher than the industry
Competitors/Peer firms of
GWRE
Full Truck Alliance Co Ltd (XNYS:YMM)
PURE STORAGE, INC. (XNYS:PSTG)
ARROW ELECTRONICS, INC. (XNYS:ARW)
PROCORE TECHNOLOGIES, INC. (XNYS:PCOR)
AVALARA, INC. (XNYS:AVLR)
SMARTSHEET INC. (XNYS:SMAR)
ENDAVA PLC (XNYS:DAVA)
Telus International (Cda) Inc (XNYS:TIXT)
-
Current Analyst Ratings
Strong buy�8%
Buy�21%
Hold�13%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Buy
Income Statement
Period:
TTM
Date:
4/30/22
Revenue:
797.45M
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
431.77M
365.68M
243.91M
102.35M
289.09M
186.75M
-
533.00M
3.41M
10.56M
17.99M
- 138875.00K
- 167322.00K
- 150433.00K
- 198978.00K
- 16991.00K
- 150433.00K
Statement of Cash Flow
Date:
Period:
8.43M
Differed Income Tax :
- 17551.00K
Stock Based Compensation :
32.24M
Change in Working Capital :
- 87181.00K
Accounts Receivables:
24.09M
Other Working Capital:
- 93093.00K
Other Non-Cash Items:
8.29M
Net Cash Provided by Operating Activities:
- 107042.00K
Investments in PP&E:
- 3333.00K
Net Acquisitions:
- 43830.00K
Purchases of Investments:
- 241247.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
10/31/21
2022
Q1
239.62M
602.16M
841.78M
167.44M
-
71.44M
1.08B
177.34M
372.06M
31.69M
301.40M
153.37M
61.83M
1.10B
-
2.18B
27.40M
11.31M
3.50M
110.36M
55.09M
204.17M
459.65M
10.26M
475.80M
-
679.96M
8.00K
- 143638.00K
- 7741.0K
-
October 31, 2021 at 12:00:00 AM
964.77M
1.50B
2.18B
903.56M
470.96M
231.3M
300.27M
- 3783.00K
8.08M
-
-
- 26262.00K
-
17.00K
- 26245.00K
- 984.00K
- 126190.00K
258.72M
384.91M
- 107042.00K
- 7116.00K
- 114158.00K
Our Proprietary Portfolio Rating
Our Rating:
A+
Price Forecast/Expected Price in Next 5 Years of
GWRE
2023
2024
2025
2026
2027
$58.66
$63.81
$69.42
$75.52
$82.15