Adobe (NASDAQ:ADBE – Get Free Report) and Guidewire Software (NYSE:GWRE – Get Free Report) are both large-cap technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their dividends, profitability, valuation, institutional ownership, risk, earnings and analyst recommendations.
Analyst Recommendations
This is a breakdown of current recommendations for Adobe and Guidewire Software, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Adobe | 7 | 20 | 9 | 0 | 2.06 |
| Guidewire Software | 0 | 4 | 12 | 0 | 2.75 |
Adobe currently has a consensus target price of $283.90, suggesting a potential upside of 14.33%. Guidewire Software has a consensus target price of $216.23, suggesting a potential upside of 27.80%. Given Guidewire Software’s stronger consensus rating and higher probable upside, analysts clearly believe Guidewire Software is more favorable than Adobe.
Profitability
This table compares Adobe and Guidewire Software’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Adobe | 28.05% | 65.65% | 25.54% |
| Guidewire Software | 9.44% | 12.66% | 6.73% |
Insider and Institutional Ownership
81.8% of Adobe shares are owned by institutional investors. 0.2% of Adobe shares are owned by company insiders. Comparatively, 0.5% of Guidewire Software shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Volatility and Risk
Adobe has a beta of 1.42, indicating that its stock price is 42% more volatile than the S&P 500. Comparatively, Guidewire Software has a beta of 1.02, indicating that its stock price is 2% more volatile than the S&P 500.
Earnings and Valuation
This table compares Adobe and Guidewire Software”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Adobe | $25.97 billion | 3.72 | $7.13 billion | $17.92 | 13.86 |
| Guidewire Software | $1.48 billion | 9.55 | $139.28 million | $1.63 | 103.80 |
Adobe has higher revenue and earnings than Guidewire Software. Adobe 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
Adobe beats Guidewire Software on 8 of the 14 factors compared between the two stocks.
About Adobe
Adobe Inc., together with its subsidiaries, operates as a diversified software company worldwide. It operates through three segments: Digital Media, Digital Experience, and Publishing and Advertising. The Digital Media segment offers products, services, and solutions that enable individuals, teams, and enterprises to create, publish, and promote content; and Document Cloud, a unified cloud-based document services platform. Its flagship product is Creative Cloud, a subscription service that allows members to access its creative products. This segment serves content creators, students, workers, marketers, educators, enthusiasts, and communicators. The Digital Experience segment provides an integrated platform and set of applications and services that enable brands and businesses to create, manage, execute, measure, monetize, and optimize customer experiences from analytics to commerce. This segment serves marketers, advertisers, agencies, publishers, merchandisers, merchants, web analysts, data scientists, developers, and executives across the C-suite. The Publishing and Advertising segment offers products and services, such as e-learning solutions, technical document publishing, web conferencing, document and forms platform, web application development, and high-end printing, as well as Advertising Cloud offerings. It also provides consulting, technical support, and learning services. The company offers its products and services directly to enterprise customers through its sales force and local field offices, as well as to end users through app stores and through its website at adobe.com. It also distributes products and services through distributors, value-added resellers, systems integrators, software vendors and developers, retailers, and original equipment manufacturers. The company was formerly known as Adobe Systems Incorporated and changed its name to Adobe Inc. in October 2018. Adobe Inc. was founded in 1982 and is headquartered in San Jose, California.
About Guidewire Software
Guidewire Software, Inc. provides a platform for property and casualty (P&C) insurers worldwide. The company offers Guidewire InsuranceSuite Cloud, such as PolicyCenter Cloud, BillingCenter Cloud, and ClaimCenter Cloud applications. It also provides Guidewire InsuranceNow, a cloud-based platform that offers policy, billing, and claims management functionality to insurers; and Guidewire InsuranceSuite for Self-Managed. In addition, the company offers Guidewire Rating Management to manage the pricing of insurance products; and Guidewire Reinsurance Management to use rules-based logic to execute reinsurance strategy through underwriting and claims processes. Further, it provides Guidewire Underwriting Management, a cloud-based integrated business application; Guidewire AppReader, a submission intake management solution; Guidewire ClaimCenter Package for the London market supports the claims workflow used by London Market insurers and brokers; Guidewire Digital Engagement Applications, which enable insurers to provide digital experiences to customers, agents, vendors, and field personnel through their device of choice; and Guidewire for Salesforce to provide customer information regarding policies and claims. Additionally, the company offers Guidewire Predict, a P&C-specific machine-learning platform; Guidewire HazardHub that allows insurers to understand, assess, price, and manage property risk; Guidewire Canvas, Guidewire Compare, and Guidewire Explore cloud-native applications; and Guidewire Cyence, a cyber-risk economic modeling product. The company was incorporated in 2001 and is headquartered in San Mateo, California.
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