Cloudflare (NYSE:NET – Get Free Report) and Guidewire Software (NYSE:GWRE – Get Free Report) are both large-cap computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, profitability, risk, analyst recommendations and institutional ownership.
Analyst Ratings
This is a summary of recent ratings and target prices for Cloudflare and Guidewire Software, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Cloudflare | 3 | 12 | 10 | 0 | 2.28 |
| Guidewire Software | 1 | 2 | 11 | 0 | 2.71 |
Cloudflare currently has a consensus price target of $92.29, indicating a potential upside of 21.36%. Guidewire Software has a consensus price target of $158.38, indicating a potential downside of 2.06%. Given Cloudflare’s higher possible upside, equities analysts plainly believe Cloudflare is more favorable than Guidewire Software.
Valuation & Earnings
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Cloudflare | $1.48 billion | 17.49 | -$183.95 million | ($0.53) | -143.49 |
| Guidewire Software | $980.50 million | 13.63 | -$111.86 million | ($0.13) | -1,244.00 |
Guidewire Software has lower revenue, but higher earnings than Cloudflare. Guidewire Software is trading at a lower price-to-earnings ratio than Cloudflare, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Cloudflare and Guidewire Software’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Cloudflare | -6.90% | -8.54% | -2.42% |
| Guidewire Software | -1.11% | -1.19% | -0.74% |
Institutional and Insider Ownership
82.7% of Cloudflare shares are held by institutional investors. 12.8% of Cloudflare shares are held by company insiders. Comparatively, 0.4% of Guidewire Software shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Risk and Volatility
Cloudflare has a beta of 1.1, meaning that its stock price is 10% more volatile than the S&P 500. Comparatively, Guidewire Software has a beta of 1.18, meaning that its stock price is 18% more volatile than the S&P 500.
Summary
Guidewire Software beats Cloudflare on 8 of the 14 factors compared between the two stocks.
About Cloudflare
Cloudflare, Inc. operates as a cloud services provider that delivers a range of services to businesses worldwide. The company provides an integrated cloud-based security solution to secure a range of combination of platforms, including public cloud, private cloud, on-premise, software-as-a-service applications, and IoT devices; and website and application security products comprising web application firewall, bot management, distributed denial of service, API gateways, SSL/TLS encryption, script management, security center, and rate limiting products. It offers website and application performance solutions, including content delivery, load balancing, DNS, agro smart routing, video stream delivery, web optimization, cache reserve, cloudfare waiting room, and cloudfare data localization suite; SASE platform through cloudfare one that provides a cloud-based network-as-a-service; network services which deliver network connectivity, security, and performance, including magic WAN, magic transit, magic firewall, cloudflare network interconnect, and spectrum. In addition, the company provides zero trust services, such as cloudflare access, cloudflare gateway, remote browser isolation, cloud access security broker, cloud email security, and data loss prevention products that protects, inspects, and provides privilege rules to grant access to data and application. Further, it provides developer-based solutions consisting of cloudflare workers, R2 object storage, workers KV, durable objects, cloudfare pages, cloudfare stream, and cloudfare images; and consumer products comprising of 1.1.1.1, a DNS resolver, WARP, a virtual private network, and cloudfare registrar that secures registration and management of domain names. The company serves customers in the technology, healthcare, financial services, consumer and retail, industrial, and non-profit industries, as well as government. Cloudflare, Inc. was incorporated in 2009 and is headquartered in San Francisco, 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.
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