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Factors to Consider Ahead of Guidewire's (GWRE) Q1 Earnings

Zacks Equity Research

Guidewire Software, Inc. GWRE is slated to report first-quarter fiscal 2020 results on Nov 5.

For the fiscal first quarter, Guidewire expects revenues of $149-$153 million. The Zacks Consensus Estimate for revenues is pegged at $151.3 million, indicating a 15.8% decline from the year-ago quarter’s reported figure.

Non-GAAP net income per share is projected to be 1-5 cents. The Zacks Consensus Estimate for earnings has been unchanged in the past 30 days at 3 cents per share, suggesting a decline of 91.7% from the year-ago reported figure.

Notably, the company beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters. It has a positive earnings surprise of 73.99%, on average, for the past four quarters.

In the fourth quarter of fiscal 2019, the company reported non-GAAP earnings of 56 cents per share, beating the Zacks Consensus Estimate by 12%. Total revenues of $207.9 million surpassed the Zacks Consensus Estimate by 1.39%.

Let’s delve deeper and analyze the factors likely to influence the company’s results in the to-be-reported quarter.

Factors at Play

Robust adoption of cloud-based Guidewire InsurancePlatform products among insurers is likely to have driven revenues in the fiscal first quarter. Particularly, growing clout of Guidewire Cloud and ClaimCenter are expected to have favored top-line performance.

Markedly, prominent insurers — including the likes of The Commonwell Mutual Insurance Group, Society Insurance, BCM Insurance Company, Gore Mutual Insurance Company, EMC Insurance Companies, — selected the company’s InsurancePlatform suite of solutions in the quarter under review. This is expected to have generated incremental revenues in the to-be-reported quarter.

Guidewire Software, Inc. Price and EPS Surprise


Guidewire Software, Inc. Price and EPS Surprise
Guidewire Software, Inc. Price and EPS Surprise

Guidewire Software, Inc. price-eps-surprise | Guidewire Software, Inc. Quote

Moreover, Guidewire’s fiscal first-quarter results are expected to reflect gains from an expanding partner base in the PartnerConnect program. Notably, with the PartnerConnect program, insurers can easily access Guidewire’s Marketplace, which helps them introduce innovative solutions and adapt to changing market demands.

Further, the cross-selling of product suites is expected to have widened customer base and driven revenues in the fiscal first quarter.

Additionally, the company is increasing investments to enhance insurance software products via collaborations with leading on-demand cloud infrastructure vendors, including Amazon Web Services and Microsoft Azure.

However, increasing expenditure on product enhancements and marketing initiatives is anticipated to have limited margin expansion in the fiscal first quarter.

What Our Model Says

According to the Zacks model, a company has a good chance of beating estimates if it has the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Although Guidewire has a Zacks Rank #3, its Earnings ESP of 0.00% makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some stocks you may consider, as according to our proven model, these have the right mix of elements to beat estimates this time around.

Dollar General Corporation DG presently has an Earnings ESP of +1.23% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco Wholesale Corporation COST currently has an Earnings ESP of +1.01% and a Zacks Rank of 2.

The Cooper Companies, Inc. COO has an Earnings ESP of +0.74% and a Zacks Rank of 3 at present.

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Guidewire Software, Inc. (GWRE) : Free Stock Analysis Report
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Costco Wholesale Corporation (COST) : Free Stock Analysis Report
Dollar General Corporation (DG) : Free Stock Analysis Report
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