Guidewire Software Inc. Common Stock (GWRE)

FairStock Score: 35/100 — MIXED

Key Financials

Strengths

• Generates $206 million in annual free cash flow (1.9% yield on market cap)
• Strong Piotroski F-Score of 8/9 indicating robust financial health across profitability, leverage, and efficiency metrics
• Solid return on equity of 13.6% above cost of capital
• Conservative balance sheet with debt-to-equity of just 0.47, providing financial flexibility
• Altman Z-Score of 5.8 confirms minimal bankruptcy risk and strong solvency

Concerns

• Trades significantly above Graham Number ($30) with negative 332% margin of safety—limited downside protection

AI Analysis

Guidewire Software Inc. Common Stock is a mid-cap technology company valued at $11.0 billion. The business generates $1.3 billion in annual revenue with a 4.5% net margin and $206 million in free cash flow. From a quality standpoint, Guidewire shows near-perfect Piotroski F-Score of 8/9 indicating exceptional financial health and Altman Z-Score of 5.8 confirms fortress-level solvency. On valuation, the stock is commanding a steep 59.1x multiple, with trades far above its Graham Number ($30) with no margin of safety. Growth dynamics show revenue growing at 24.1% and profit growth of 261.3%. Our composite FairStock Score of 35/100 reflects below-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Guidewire's 24% revenue growth trajectory could accelerate as it captures additional market share in the technology sector. With $206 million in annual free cash flow (1.9% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 59x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer