Value
6.2/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 2.0 |
| P/S | 5.9 |
| Fwd P/E | 4.6 |
| PEG | 9.4 |
| Analyst target | 9.0 |
- ▸Forward P/E: 26.8x
- ▸PEG: 0.61
GWRE · Why this verdict
Why Guidewire Software (GWRE) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.3/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Guidewire has compiled four quarters of substantial earnings outperformance and converts cash at nearly twice its reported net income, supporting a high-quality growth profile; however, a confirmed price downtrend with a hard technical block keeps the setup on hold until the trend heals, at which point analysts project 50% upside from current levels.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company has beaten analyst estimates in each of the last four quarters with an average upside surprise near 56%, indicating a disciplined pattern of consistently under-promising and over-delivering on profitability. Earnings | EPS beats continue for at least 2 more consecutive quarters with average surprises above 10%, sustaining the current track record. | →Stable |
| CounterA long beat streak often reflects analyst estimates that were reset too conservatively; once forecasters raise their bars, maintaining positive surprises becomes mechanically harder without genuine earnings acceleration. | ||
Free cash flow is running at approximately 177% of reported net income, meaning the business generates substantially more real cash than the income statement reflects — a strong signal that reported earnings understate true economic profit. Quality breakdown | Free cash flow remains above 120% of net income over the next four quarters, confirming the structural nature of the conversion premium. | →Stable |
| CounterCash conversion ratios well above 100% can be driven by favorable working-capital timing or deferred-revenue dynamics rather than durable structural advantage; a normalization of those tailwinds could compress conversion toward 100% without any change in business quality. | ||
The 200-day moving average is declining at roughly 6% per month and a hard technical block is in place, confirming a downtrend that overrides the business-quality case and keeps any constructive position off the table until the trend reverses. Momentum breakdown | The 200-day moving average slope turns flat or rising and price sustains a close above that average for at least 10 consecutive sessions, signaling a trend reversal. | →Stable |
| CounterTechnical blocks in quality growth software names can lift quickly if the business delivers a catalyst — a single large earnings beat or a guidance raise can ignite a rapid re-rating that outpaces a slowly recovering moving-average line. | ||
Analysts carry a consensus price target implying roughly 50% upside from current levels, and the risk-to-reward structure is approximately 7-to-1 in favor of longs — a geometry that would be highly attractive the moment the technical obstruction clears. Price targets | The gap to analyst targets is preserved or widens over the next 6 months through upward estimate revisions, keeping the setup compelling when technical conditions allow entry. | →Stable |
| CounterAnalyst price targets frequently lag fundamental deterioration; if growth slows or the sector de-rates, the consensus target may be revised materially lower before technical conditions improve, eroding the apparent upside. | ||
The company has beaten analyst estimates in each of the last four quarters with an average upside surprise near 56%, indicating a disciplined pattern of consistently under-promising and over-delivering on profitability.
→StableEarnings
- Expectation
- EPS beats continue for at least 2 more consecutive quarters with average surprises above 10%, sustaining the current track record.
CounterA long beat streak often reflects analyst estimates that were reset too conservatively; once forecasters raise their bars, maintaining positive surprises becomes mechanically harder without genuine earnings acceleration.
Free cash flow is running at approximately 177% of reported net income, meaning the business generates substantially more real cash than the income statement reflects — a strong signal that reported earnings understate true economic profit.
→StableQuality breakdown
- Expectation
- Free cash flow remains above 120% of net income over the next four quarters, confirming the structural nature of the conversion premium.
CounterCash conversion ratios well above 100% can be driven by favorable working-capital timing or deferred-revenue dynamics rather than durable structural advantage; a normalization of those tailwinds could compress conversion toward 100% without any change in business quality.
The 200-day moving average is declining at roughly 6% per month and a hard technical block is in place, confirming a downtrend that overrides the business-quality case and keeps any constructive position off the table until the trend reverses.
→StableMomentum breakdown
- Expectation
- The 200-day moving average slope turns flat or rising and price sustains a close above that average for at least 10 consecutive sessions, signaling a trend reversal.
CounterTechnical blocks in quality growth software names can lift quickly if the business delivers a catalyst — a single large earnings beat or a guidance raise can ignite a rapid re-rating that outpaces a slowly recovering moving-average line.
Analysts carry a consensus price target implying roughly 50% upside from current levels, and the risk-to-reward structure is approximately 7-to-1 in favor of longs — a geometry that would be highly attractive the moment the technical obstruction clears.
→StablePrice targets
- Expectation
- The gap to analyst targets is preserved or widens over the next 6 months through upward estimate revisions, keeping the setup compelling when technical conditions allow entry.
CounterAnalyst price targets frequently lag fundamental deterioration; if growth slows or the sector de-rates, the consensus target may be revised materially lower before technical conditions improve, eroding the apparent upside.
Per-dimension breakdown
Quality
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 4.0 |
| ROA | 1.9 |
| Gross margin | 8.8 |
| Op margin | 3.3 |
| Net margin | 5.6 |
| Current ratio | 8.3 |
| FCF quality | 10.0 |
| Moat | 7.1 |
| Piotroski F | 8.9 |
- ▸Excellent cash conversion: 177% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
4.6/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 9.2 |
| EPS growth | 0.0 |
- ▸Strong growth: 27% YoY
Momentum
2.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.0 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 1.0 |
| Volume | 0.0 |
- ▸Capitulation risk (RSI 20, below 200MA)
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -7.1%/30d — confirmed downtrend
Sentiment
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 6.0 |
| Analyst rating | 7.2 |
| Price target | 9.9 |
- ▸Analyst upside: 88%
Insider
3.9/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Modest insider selling — $3,915,262 (0.043% of mkt cap)
Peer rank
3.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.1 |
| quality rank | 5.5 |
| growth rank | 7.7 |
Technical
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 7.2 |
| support resistance | 8.9 |
| 52w position | 0.0 |
| gap | 6.0 |
Risk (lower is worse)
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 6.7 |
| days to cover | 6.9 |
| volatility | 0.0 |
| put call | 9.0 |
| implied vol | 2.4 |
| max pain risk | 3.0 |
| beta | 7.5 |
| debt equity | 7.8 |
- ▸High IV: 65%
- ▸Above max pain $80
Catalyst
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 5.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- ASYMMETRY:4.7>=1.5
- INSIDER:OK
- 8K:CLEAN
- EARNINGS_PROXIMITY:70d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:2.8<4.5
- DEATH_CROSS:HARD_BLOCK
Warning (0)
none
Reward-to-Risk
4.70
Upside
+63.6%
Downside
13.5%
Sizing output
AVOID
SetupFALLING_KNIFE — Death cross, below all MAs, RSI 20, MACD bearish
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.3 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Sentiment at 7.6) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:2.8<4.5, DEATH_CROSS:HARD_BLOCK) reinforce the read. Current asymmetry R:R is 4.70 — supplementary context, not the trigger for this path.
The strongest dimensions are Sentiment at 7.6, Catalyst at 7.0, and Quality at 6.4; the weakest are Momentum at 2.8, Peer rank at 3.8, and Insider at 3.9. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of 4.70 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1The company has beaten analyst estimates in each of the last four quarters with an average upside surprise near 56%, indicating a disciplined pattern of consistently under-promising and over-delivering on profitability.
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2Free cash flow is running at approximately 177% of reported net income, meaning the business generates substantially more real cash than the income statement reflects — a strong signal that reported earnings understate true economic profit.
Trip ifFree cash flow drops below 100% of reported net income for 2 consecutive quarters.
- P3The 200-day moving average is declining at roughly 6% per month and a hard technical block is in place, confirming a downtrend that overrides the business-quality case and keeps any constructive position off the table until the trend reverses.
Trip ifPrice reclaims the 200-day moving average and holds above it for 10 consecutive sessions with the 30-day slope turning positive.
- P4Analysts carry a consensus price target implying roughly 50% upside from current levels, and the risk-to-reward structure is approximately 7-to-1 in favor of longs — a geometry that would be highly attractive the moment the technical obstruction clears.
Trip ifAnalyst consensus price target is revised below $145, reducing implied upside to less than 20% from current levels.