Guidewire Software (GWRE) & Ellie Mae (ELLI) Critical Review

Ellie Mae (NYSE: ELLI) and Guidewire Software (NYSE:GWRE) are both mid-cap technology companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, profitability, valuation and risk.

Volatility and Risk

Ellie Mae has a beta of 0.28, meaning that its share price is 72% less volatile than the S&P 500. Comparatively, Guidewire Software has a beta of 1.17, meaning that its share price is 17% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Ellie Mae 13.45% 6.39% 5.75%
Guidewire Software 3.82% 3.29% 2.78%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Ellie Mae and Guidewire Software, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ellie Mae 0 4 9 0 2.69
Guidewire Software 0 2 6 1 2.89

Ellie Mae currently has a consensus price target of $113.10, suggesting a potential upside of 22.61%. Guidewire Software has a consensus price target of $79.57, suggesting a potential upside of 8.25%. Given Ellie Mae’s higher probable upside, equities analysts plainly believe Ellie Mae is more favorable than Guidewire Software.

Valuation & Earnings

This table compares Ellie Mae and Guidewire Software’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ellie Mae $360.29 million 8.84 $37.77 million $1.51 61.09
Guidewire Software $514.28 million 10.77 $21.22 million $0.25 294.04

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

Summary

Ellie Mae beats Guidewire Software on 7 of the 13 factors compared between the two stocks.

Ellie Mae Company Profile

Ellie Mae, Inc. is a provider of on-demand software solutions and services for the residential mortgage industry in the United States. Banks, credit unions, mortgage lenders and mortgage brokers use the Company’s Encompass mortgage management solution to originate and fund mortgages. The Company’s Encompass software is an enterprise solution that handles functions involved in running the business of originating mortgages, including customer relationship management; loan processing; underwriting; preparation of application, disclosure and closing documents; funding and closing the loan for the borrower; compliance with regulatory and investor requirements, and overall enterprise management. It delivers Encompass software in an on-demand Software-as-a-Service (SaaS). It also hosts the Ellie Mae Network, an electronic platform that allows Encompass users to conduct electronic business transactions with investors and service providers they work with in order to process and fund loans.

Guidewire Software Company Profile

Guidewire Software, Inc. is a provider of software products for property and casualty (P&C) insurers. The Company’s software serves as a technology platform for P&C insurance carriers. The Company’s InsurancePlatform consists of three elements: core transaction processing, data management and analytics, and digital engagement. The Company sells its products to a range of global P&C insurance carriers ranging from global insurers to national carriers to regional carriers. The Company’s core transaction processing includes Guidewire InsuranceSuite, Guidewire PolicyCenter, Guidewire ClaimCenter, Guidewire BillingCenter and InsuranceSuite Add-on Modules. The Company’s data management and analytics includes Guidewire DataHub, Guidewire InfoCenter, Guidewire Live and Guidewire Predictive Analytics. The Company’s digital engagement includes Guidewire Digital Portals.

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