Critical Survey: Guidewire Software (NYSE:GWRE) & 8X8 (NASDAQ:EGHT)

Guidewire Software (NYSE:GWRE) and 8X8 (NASDAQ:EGHT) are both computer and technology companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, valuation, analyst recommendations, dividends and profitability.

Analyst Recommendations

This is a summary of current ratings for Guidewire Software and 8X8, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Guidewire Software	1	3	9	0	2.62
8X8	3	2	3	0	2.00

Guidewire Software currently has a consensus target price of $274.08, suggesting a potential upside of 11.86%. 8X8 has a consensus target price of $2.49, suggesting a potential upside of 17.25%. Given 8X8’s higher probable upside, analysts clearly believe 8X8 is more favorable than Guidewire Software.

Institutional & Insider Ownership

94.0% of 8X8 shares are owned by institutional investors. 0.5% of Guidewire Software shares are owned by insiders. Comparatively, 2.0% of 8X8 shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares Guidewire Software and 8X8’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Guidewire Software	5.81%	9.00%	4.66%
8X8	-2.96%	11.38%	1.92%

Earnings and Valuation

This table compares Guidewire Software and 8X8″s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Guidewire Software	$1.20 billion	17.23	$69.80 million	$0.80	306.29
8X8	$715.07 million	0.40	-$27.21 million	($0.16)	-13.25

Guidewire Software has higher revenue and earnings than 8X8. 8X8 is trading at a lower price-to-earnings ratio than Guidewire Software, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Guidewire Software has a beta of 1.22, suggesting that its stock price is 22% more volatile than the S&P 500. Comparatively, 8X8 has a beta of 1.87, suggesting that its stock price is 87% more volatile than the S&P 500.

Summary

Guidewire Software beats 8X8 on 9 of the 14 factors compared between the two stocks.

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.

About 8X8

8×8, Inc. engages in the provision of enterprise communication solutions. It offers solutions to the business services, education, financial services, government, healthcare, and manufacturing industries. The company was founded in February 1987 and is headquartered in Campbell, CA.