Value
4.1/10data confidence 67%| Component | Sub-score |
|---|---|
| P/S | 4.2 |
| Fwd P/E | 4.3 |
| PEG | 4.7 |
| Analyst target | 3.0 |
- ▸Forward P/E: 28.5x
- ▸PEG: 1.78
CWAN · Why this verdict
Why Clearwater Analytics Holdings, (CWAN) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.8/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Clearwater Analytics is growing at 74% annually and generating a 19% free-cash-flow margin despite GAAP losses — placing it among software industry growth leaders — but the stock has moved past its near-term price target and carries an elevated put/call ratio of 2.74, leaving the near-term risk/reward unfavorable.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue growth of 74% year-over-year places the company at the top of its software peer group — a pace that, if sustained, would rapidly expand the addressable revenue base and compress the valuation multiple on a forward basis. Growth breakdown | Annual revenue growth remains above 40% for the next four quarters, validating that the expansion rate is durable rather than a one-quarter surge. | →Stable |
| CounterHyper-growth rates are difficult to sustain as the revenue base scales; deceleration from this rate — even to healthy double-digit growth — could compress the valuation multiple sharply. | ||
The company generates a 19% free-cash-flow margin with a 2.2% FCF yield, and posts a Rule of 40 score of 94 — an elite-level reading that demonstrates the business converts growth into cash despite reporting GAAP losses. Quality breakdown | FCF margin remains above 15% and the Rule of 40 score stays above 70 over the next four quarters, confirming cash-generation quality is durable. | →Stable |
| CounterGAAP profitability remains absent; if stock-based compensation or other non-cash charges continue to suppress net income, the gap between GAAP and free-cash-flow metrics makes near-term earnings-per-share difficult to anchor. | ||
A put/call ratio of 2.74 signals that options market participants are positioning defensively at a scale that materially outpaces bullish positioning, reflecting significant near-term downside concern being hedged in the market. Risk breakdown | If the elevated skepticism proves unfounded, the put/call ratio should compress below 1.5 over the next 6 months as bearish hedges expire without a catalyst. | →Stable |
| CounterElevated put/call ratios can be contrarian signals; heavy hedging sometimes precedes a short-covering rally if the feared catalyst fails to materialize. | ||
Trading above its near-term price target with a forward P/E of 28.1 times, the current setup implies negative expected return to the technical target — a risk/reward that does not favor new entry at current levels. Bear case | A correction or sideways consolidation over the next 6 to 12 months brings the stock back within 5% of its near-term target, restoring a more balanced setup. | →Stable |
| CounterAnalyst targets often lag strong performers; if the next earnings print demonstrates continued 70%+ growth, consensus targets could be raised substantially, retroactively justifying the current price. | ||
Revenue growth of 74% year-over-year places the company at the top of its software peer group — a pace that, if sustained, would rapidly expand the addressable revenue base and compress the valuation multiple on a forward basis.
→StableGrowth breakdown
- Expectation
- Annual revenue growth remains above 40% for the next four quarters, validating that the expansion rate is durable rather than a one-quarter surge.
CounterHyper-growth rates are difficult to sustain as the revenue base scales; deceleration from this rate — even to healthy double-digit growth — could compress the valuation multiple sharply.
The company generates a 19% free-cash-flow margin with a 2.2% FCF yield, and posts a Rule of 40 score of 94 — an elite-level reading that demonstrates the business converts growth into cash despite reporting GAAP losses.
→StableQuality breakdown
- Expectation
- FCF margin remains above 15% and the Rule of 40 score stays above 70 over the next four quarters, confirming cash-generation quality is durable.
CounterGAAP profitability remains absent; if stock-based compensation or other non-cash charges continue to suppress net income, the gap between GAAP and free-cash-flow metrics makes near-term earnings-per-share difficult to anchor.
A put/call ratio of 2.74 signals that options market participants are positioning defensively at a scale that materially outpaces bullish positioning, reflecting significant near-term downside concern being hedged in the market.
→StableRisk breakdown
- Expectation
- If the elevated skepticism proves unfounded, the put/call ratio should compress below 1.5 over the next 6 months as bearish hedges expire without a catalyst.
CounterElevated put/call ratios can be contrarian signals; heavy hedging sometimes precedes a short-covering rally if the feared catalyst fails to materialize.
Trading above its near-term price target with a forward P/E of 28.1 times, the current setup implies negative expected return to the technical target — a risk/reward that does not favor new entry at current levels.
→StableBear case
- Expectation
- A correction or sideways consolidation over the next 6 to 12 months brings the stock back within 5% of its near-term target, restoring a more balanced setup.
CounterAnalyst targets often lag strong performers; if the next earnings print demonstrates continued 70%+ growth, consensus targets could be raised substantially, retroactively justifying the current price.
Per-dimension breakdown
Quality
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 0.0 |
| Gross margin | 9.2 |
| Op margin | 1.6 |
| Net margin | 0.0 |
| Current ratio | 7.8 |
| FCF quality | 6.9 |
| Moat | 6.5 |
| Rule of 40 | 9.5 |
| Piotroski F | 8.9 |
- ▸FCF-positive despite GAAP loss (FCF margin 19%, FCF yield 2.2%)
- ▸Rule of 40: 94 (elite)
- ▸Strong Piotroski F-Score: 8/9
Growth
10.0/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
- ▸Strong growth: 74% YoY
Momentum
7.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 6.8 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 10.0 |
| vol acceleration | 5.5 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 8.0 |
| Analyst rating | 5.0 |
| Price target | 4.9 |
- ▸LLM news sentiment: +0.60 (n=1)
Insider
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 7.0 |
| notable moves | 7.0 |
- ▸Modest insider selling — $4,198,056 (0.057% of mkt cap)
Peer rank
3.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 0.9 |
| quality rank | 2.1 |
| growth rank | 9.8 |
- ▸Industry growth leader
Technical
3.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.0 |
| 52w position | 9.6 |
Risk (lower is worse)
6.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.3 |
| days to cover | 3.1 |
| volatility | 10.0 |
| put call | 10.0 |
| implied vol | 0.0 |
| max pain risk | 3.0 |
| beta | 9.4 |
| debt equity | 8.3 |
| news risk | 6.0 |
- ▸High IV: 133%
- ▸Above max pain $19
Catalyst
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings timing | 5.0 |
| surprise avg | 2.8 |
| news activity | 5.0 |
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (6)
- MOMENTUM:7.7>=5.5
- INSIDER:OK
- 8K:CLEAN
- EARNINGS_PROXIMITY:41d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.9=NEGATIVE
Warning (0)
none
Reward-to-Risk
-0.89
Upside
-13.4%
Downside
15.0%
Sizing output
AVOID
SetupBREAKOUT — Golden cross, above all MAs, RSI 63, MACD bullish
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:7.7>=5.5. Top dim: Growth at 10.0; weakest: Technical at 3.2. No conviction either direction.
The strongest dimensions are Growth at 10.0, Momentum at 7.7, and Risk (lower is worse) at 6.2; the weakest are Technical at 3.2, Peer rank at 3.2, and Value at 4.1. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of -0.89 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Revenue growth of 74% year-over-year places the company at the top of its software peer group — a pace that, if sustained, would rapidly expand the addressable revenue base and compress the valuation multiple on a forward basis.
Trip ifRevenue growth falls below 40% YoY for 2 consecutive quarters from the current 74%.
- P2The company generates a 19% free-cash-flow margin with a 2.2% FCF yield, and posts a Rule of 40 score of 94 — an elite-level reading that demonstrates the business converts growth into cash despite reporting GAAP losses.
Trip ifFree-cash-flow margin falls below 10% for 2 consecutive quarters from the current 19%.
- P3A put/call ratio of 2.74 signals that options market participants are positioning defensively at a scale that materially outpaces bullish positioning, reflecting significant near-term downside concern being hedged in the market.
Trip ifPut/call ratio compresses below 1.0 for 4 consecutive weeks.
- P4Trading above its near-term price target with a forward P/E of 28.1 times, the current setup implies negative expected return to the technical target — a risk/reward that does not favor new entry at current levels.
Trip ifPrice corrects below $23.94 (the near-term price target) and holds for 2 consecutive weeks.