Guidewire Software, Inc. (NYSE:GWRE), may not be a large-cap stock, but has seen a decent spike in share price at the teen-level on the NYSE in recent months. Since many analysts study mid-cap stocks, we can expect that any price-sensitive announcements will already be factored into the stock’s share price. But what if the stock is still a bargain? Today I’ll be analyzing the latest data on Guidewire Software’s outlook and valuation to see if the opportunity still exists.
What is Guidewire software worth?
According to my valuation model, Guidewire Software appears to be reasonably priced at about 20% below my NAV, meaning that if you bought Guidewire Software today, you would pay a reasonable price for it. And if you think the actual value of the company is $96.66, then there isn’t much room for the stock price to grow beyond what it’s currently trading. So, is there still a chance to buy low in the future? Since Guidewire Software’s stock is quite volatile (ie price movements are greater than the rest of the market), this could mean the price could drop lower, giving us a chance to buy later. This is based on the high beta, which is a good indicator of stock price volatility.
What does the future of Guidewire Software look like?
Investors seeking growth in their portfolio may want to consider a company’s prospects before purchasing its stock. Buying a great company with strong prospects at a cheap price is always a good investment, so let’s take a look at the company’s future prospects as well. With an expected earnings growth of 46% in the coming years, the future looks bright for Guidewire Software. It appears that higher cash flow is at stake for the stock, which should lead to a higher valuation of the stock.
What this means for you?
Are you a shareholder? It seems the market has already priced in GWRE’s positive outlook, with stocks trading around fair value. However, there are also other important factors that we have not taken into account today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Are you convinced enough to buy if the price fluctuates below its true value?
Are you a potential investor? If you’ve been eyeing GWRE, now may not be the best time to buy as it trades around fair value. However, the positive outlook is encouraging for the company, meaning it’s worth delving deeper into other factors, such as balance sheet strength, to take advantage of the next drop in prices.
If you want to dive deeper into Guidewire software, you should also look at the risks it currently faces. Every business has risks, and we’ve seen it 2 Warning Signs for Guidewire Software you should know.
If you are no longer interested in Guidewire Software, you can use our free platform to view our list of over 50 other stocks with high growth potential.
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This article from Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or your financial situation. We strive to provide you with long-term focused analysis powered by fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Simply Wall St has no position in said stocks.
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