Confluent (NASDAQ:CFLT – Get Free Report) and Guidewire Software (NYSE:GWRE – Get Free Report) are both business services companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, institutional ownership, dividends, risk, earnings, analyst recommendations and profitability.
Insider and Institutional Ownership
78.1% of Confluent shares are held by institutional investors. 13.8% of Confluent 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, hedge funds and endowments believe a company will outperform the market over the long term.
Profitability
This table compares Confluent and Guidewire Software’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Confluent | -42.70% | -37.78% | -12.81% |
| Guidewire Software | -0.62% | -1.29% | -0.80% |
Valuation and Earnings
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Confluent | $865.59 million | 8.24 | -$442.75 million | ($1.25) | -17.96 |
| Guidewire Software | $980.50 million | 15.94 | -$6.10 million | ($0.13) | -1,454.62 |
Guidewire Software has higher revenue and earnings than Confluent. Guidewire Software is trading at a lower price-to-earnings ratio than Confluent, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a summary of recent ratings for Confluent and Guidewire Software, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Confluent | 1 | 7 | 21 | 1 | 2.73 |
| Guidewire Software | 1 | 2 | 11 | 0 | 2.71 |
Confluent currently has a consensus target price of $29.79, indicating a potential upside of 32.71%. Guidewire Software has a consensus target price of $178.62, indicating a potential downside of 5.54%. Given Confluent’s stronger consensus rating and higher probable upside, analysts clearly believe Confluent is more favorable than Guidewire Software.
Risk and Volatility
Confluent has a beta of 0.88, meaning that its stock price is 12% less volatile than the S&P 500. Comparatively, Guidewire Software has a beta of 1.19, meaning that its stock price is 19% more volatile than the S&P 500.
Summary
Guidewire Software beats Confluent on 8 of the 15 factors compared between the two stocks.
About Confluent
Confluent, Inc. operates a data streaming platform in the United States and internationally. The company provides platforms that allow customers to connect their applications, systems, and data layers, such as Confluent Cloud, a managed cloud-native software-as-a-service; and Confluent Platform, an enterprise-grade self-managed software. It offers connectors for existing applications, and IT and cloud infrastructure; Apache Flink services that allows teams to create reusable data streams that can be delivered real-time; ksqlDB, a data-in-motion database that allows users to build data-in-motion applications using a few SQL statements; stream governance, a managed data governance suite that is designed for the intricacies of streaming data, which allows teams to accelerate data streaming initiatives without bypassing controls for risk management and regulatory compliance; and stream designer which builds streaming data pipelines visually. In addition, the company offers professional services comprising packaged and residency offerings; education offerings consisting of instructor-led and self-paced training and certification guidance, technical resources, and access to hands-on training and certification exams; and certification programs. It serves banking and financial services industries, as well as retail and e-commerce, manufacturing, automotive, communication service providers, gaming, public sector, insurance, and technology industries. The company was formerly known as Infinitem, Inc. and changed its name to Confluent, Inc. in September 2014. Confluent, Inc. was incorporated in 2014 and is headquartered in Mountain View, 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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