Analyzing Guidewire Software (NYSE:GWRE) and Confluent (NASDAQ:CFLT)

Confluent (NASDAQ:CFLT) and Guidewire Software (NYSE:GWRE) are both business services companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, analyst recommendations, risk, valuation, institutional ownership, profitability and dividends.

Risk and Volatility

Confluent has a beta of 0.88, meaning that its stock price is 12% less volatile than the S&P 500. Comparatively, Guidewire Software has a beta of 1.19, meaning that its stock price is 19% more volatile than the S&P 500.

Insider & Institutional Ownership

78.1% of Confluent shares are owned by institutional investors. 13.8% of Confluent shares are owned by company insiders. Comparatively, 0.4% 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 company is poised for long-term growth.

Earnings and Valuation

This table compares Confluent and Guidewire Software”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Confluent	$865.59 million	8.13	-$442.75 million	($1.25)	-17.72
Guidewire Software	$980.50 million	16.05	-$6.10 million	($0.13)	-1,464.54

Guidewire Software has higher revenue and earnings than Confluent. Guidewire Software is trading at a lower price-to-earnings ratio than Confluent, indicating that it is currently the more affordable of the two stocks.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Confluent	-42.70%	-37.78%	-12.81%
Guidewire Software	-0.62%	-1.29%	-0.80%

Analyst Recommendations

This is a summary of recent ratings for Confluent and Guidewire Software, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Confluent	1	7	21	1	2.73
Guidewire Software	1	2	11	0	2.71

Confluent presently has a consensus price target of $29.97, indicating a potential upside of 35.28%. Guidewire Software has a consensus price target of $178.62, indicating a potential downside of 6.18%. Given Confluent’s stronger consensus rating and higher probable upside, research analysts clearly believe Confluent is more favorable than Guidewire Software.

Summary

Guidewire Software beats Confluent on 8 of the 15 factors compared between the two stocks.

About Confluent

Confluent, Inc. operates a data streaming platform in the United States and internationally. The company provides platforms that allow customers to connect their applications, systems, and data layers, such as Confluent Cloud, a managed cloud-native software-as-a-service; and Confluent Platform, an enterprise-grade self-managed software. It offers connectors for existing applications, and IT and cloud infrastructure; Apache Flink services that allows teams to create reusable data streams that can be delivered real-time; ksqlDB, a data-in-motion database that allows users to build data-in-motion applications using a few SQL statements; stream governance, a managed data governance suite that is designed for the intricacies of streaming data, which allows teams to accelerate data streaming initiatives without bypassing controls for risk management and regulatory compliance; and stream designer which builds streaming data pipelines visually. In addition, the company offers professional services comprising packaged and residency offerings; education offerings consisting of instructor-led and self-paced training and certification guidance, technical resources, and access to hands-on training and certification exams; and certification programs. It serves banking and financial services industries, as well as retail and e-commerce, manufacturing, automotive, communication service providers, gaming, public sector, insurance, and technology industries. The company was formerly known as Infinitem, Inc. and changed its name to Confluent, Inc. in September 2014. Confluent, Inc. was incorporated in 2014 and is headquartered in Mountain View, 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.