Guidewire Software (GWRE) came out with quarterly earnings of $0.43 per share, beating the Zacks Consensus Estimate of $0.30 per share. This is comparable to the break-even profit per share a year ago. These figures have been adjusted for one-off items.
This quarterly report represents an earnings surprise of 43.33%. A quarter ago, it was expected that this insurance software provider would post earnings of $0.52 per share when it actually produced earnings of $0.62, delivering a surprise of 19.23%.
Over the last four quarters, the company has surpassed consensus EPS estimates four times.
Guidewire Software, which belongs to the Zacks Business – Software Services industry, posted revenues of $262.9 million for the quarter ended October 2024, surpassing the Zacks Consensus Estimate by 3.37%. This compares to revenues of $207.41 million a year ago. The company has surpassed consensus revenue estimates three times over the last four quarters.
The sustainability of the stock’s immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management’s commentary on the earnings outlook.
Shares of Guidewire Software are up about 90% since the beginning of the year, versus the S&P 500’s gain of 27.6%.
While Guidewire Software has outperformed the market so far this year, the question that comes to investors’ minds is: what’s next for the stock?
There are no easy answers to this important question, but one reliable measure that can help investors address this issue is the company’s earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.
Empirical research shows a strong correlation between near-term stock prices and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Ahead of this earnings release, the estimate revision trend for Guidewire Software was mixed. While the magnitude and direction of estimate revisions could change following the company’s just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
It will be interesting to see how the estimates for the coming quarters and the current fiscal year will change in the coming days. The current consensus EPS estimate is $0.51 on $278.91 million in revenues for the coming quarter and $1.98 on $1.14 billion in revenues for the current fiscal year.
Investors should be aware that the industry outlook can also have a material impact on the stock’s performance. In terms of the Zacks Industry Rank, Business – Software Services currently sits in the top 16% of the 250+ Zacks industries. Our research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by a more than 2-to-1 margin.
Another stock from the broader Zacks Computer and Technology sector, Simulations Plus (SLP), has yet to report results for the quarter ended November 2024.
This maker of software used in pharmaceutical research is expected to post quarterly earnings of $0.18 per share in its upcoming report, representing a year-over-year change of +80%. The consensus EPS estimate for the quarter has been revised 16.3% higher to current levels over the past 30 days.
Simulations Plus revenue is expected to be $18.69 million, up 28.9% from the same quarter last year.
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