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

Profitability

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

Net Margins Return on Equity Return on Assets
SolarWinds 20.52% 19.24% 12.70%
Guidewire Software 4.13% 3.59% 3.04%

Volatility & Risk

SolarWinds has a beta of 1.3, indicating that its share price is 30% more volatile than the S&P 500. Comparatively, Guidewire Software has a beta of 1.23, indicating that its share price is 23% more volatile than the S&P 500.

Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SolarWinds 0 0 0 0 N/A
Guidewire Software 0 3 6 1 2.80

Guidewire Software has a consensus price target of $79.57, suggesting a potential upside of 0.34%. Given Guidewire Software’s higher possible upside, analysts clearly believe Guidewire Software is more favorable than SolarWinds.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
SolarWinds N/A N/A N/A $1.18 50.83
Guidewire Software $514.28 million 11.62 $21.22 million $0.28 283.21

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.

Summary

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

SolarWinds Company Profile

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.

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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