Datawatch Corporation (NASDAQ: DWCH) and Guidewire Software (NYSE:GWRE) are both computer and technology companies, but which is the better business? We will compare the two companies based on the strength of their dividends, analyst recommendations, valuation, profitability, earnings, institutional ownership and risk.

Insider and Institutional Ownership

40.7% of Datawatch Corporation shares are owned by institutional investors. 17.7% of Datawatch Corporation shares are owned by company insiders. Comparatively, 1.0% of Guidewire Software shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Risk and Volatility

Datawatch Corporation has a beta of 1.02, indicating that its share price is 2% more volatile than the S&P 500. Comparatively, Guidewire Software has a beta of 1.22, indicating that its share price is 22% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings for Datawatch Corporation and Guidewire Software, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Datawatch Corporation 0 1 1 0 2.50
Guidewire Software 0 3 6 1 2.80

Datawatch Corporation presently has a consensus target price of $10.00, indicating a potential downside of 12.66%. Guidewire Software has a consensus target price of $79.57, indicating a potential upside of 2.71%. Given Guidewire Software’s stronger consensus rating and higher possible upside, analysts clearly believe Guidewire Software is more favorable than Datawatch Corporation.

Valuation & Earnings

This table compares Datawatch Corporation and Guidewire Software’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Datawatch Corporation $34.67 million 4.03 -$3.87 million ($0.43) -26.63
Guidewire Software $514.28 million 11.30 $47.34 million $0.28 276.68

Guidewire Software has higher revenue and earnings than Datawatch Corporation. Datawatch Corporation 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 Datawatch Corporation and Guidewire Software’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Datawatch Corporation -14.74% -10.87% -7.53%
Guidewire Software 4.13% 3.59% 3.04%

Summary

Guidewire Software beats Datawatch Corporation on 12 of the 14 factors compared between the two stocks.

Datawatch Corporation Company Profile

Datawatch Corporation is engaged in the design, development, marketing, distribution and support of business computer software primarily for the self-service data preparation and visual data discovery markets. The Company also provides services, including implementation and support of its software products, as well as training on their use and administration. The Company’s product family includes Datawatch Monarch, Datawatch Panopticon and Datawatch Report Mining Server (RMS). The Company offers its enterprise products through perpetual licenses and subscription pricing models. The Company also offers educational services for customers and partners implementing and learning about the platform, maintenance and support, and professional services to provide in-depth technical assistance for software implementations. The Company offers an array of live and virtual classroom instruction, including private onsite classes.

Guidewire Software Company Profile

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.

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