Contrasting Guidewire Software (NYSE:GWRE) and SolarWinds (SWI)

Guidewire Software (NYSE: GWRE) and SolarWinds (NYSE:SWI) are both mid-cap computer and technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their dividends, institutional ownership, profitability, risk, earnings, analyst recommendations and valuation.

Risk & Volatility

Guidewire Software has a beta of 1.18, indicating that its stock price is 18% more volatile than the S&P 500. Comparatively, SolarWinds has a beta of 1.3, indicating that its stock price is 30% more volatile than the S&P 500.

Earnings and Valuation

This table compares Guidewire Software and SolarWinds’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Guidewire Software $514.28 million 10.33 $21.22 million $0.27 261.00
SolarWinds N/A N/A N/A $1.18 50.83

Guidewire Software has higher revenue and earnings than SolarWinds. SolarWinds is trading at a lower price-to-earnings ratio than Guidewire Software, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Guidewire Software and SolarWinds’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Guidewire Software 3.82% 3.29% 2.78%
SolarWinds 20.52% 19.24% 12.70%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Guidewire Software and SolarWinds, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Guidewire Software 0 2 6 1 2.89
SolarWinds 0 0 0 0 N/A

Guidewire Software presently has a consensus price target of $79.57, suggesting a potential upside of 12.92%. Given Guidewire Software’s higher possible upside, analysts plainly believe Guidewire Software is more favorable than SolarWinds.

Summary

SolarWinds beats Guidewire Software on 5 of the 9 factors compared between the two stocks.

About Guidewire Software

Guidewire Software, Inc. is a provider of software products for property and casualty (P&C) insurers. The Company’s software serves as a technology platform for P&C insurance carriers. The Company’s InsurancePlatform consists of three elements: core transaction processing, data management and analytics, and digital engagement. The Company sells its products to a range of global P&C insurance carriers ranging from global insurers to national carriers to regional carriers. The Company’s core transaction processing includes Guidewire InsuranceSuite, Guidewire PolicyCenter, Guidewire ClaimCenter, Guidewire BillingCenter and InsuranceSuite Add-on Modules. The Company’s data management and analytics includes Guidewire DataHub, Guidewire InfoCenter, Guidewire Live and Guidewire Predictive Analytics. The Company’s digital engagement includes Guidewire Digital Portals.

About SolarWinds

SolarWinds, Inc. (SolarWinds) is a holding company. The Company designs, develops, markets, sells and supports enterprise-class information technology (IT), infrastructure management software to IT and DevOps professionals in organizations of all sizes. Its products categories include network management, which is used to monitor and manage the performance of network infrastructure; systems management, which is used to monitor and manage the performance of applications, physical and virtual servers, storage and databases; MSP, which is used by managed service providers to monitor and manage the IT infrastructure of their end clients, SMBs, and cloud, its cloud-based products, which are used to monitor and manage applications and application infrastructure. Its customers include small- and mid-size businesses, enterprises, MSPs, and local, state and federal Government entities.

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