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Guidewire Software Inc  (NYSE:GWRE) Piotroski F-Score: 6 (As of Today)

The zones of discrimination were as such:

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Guidewire Software Inc has an F-score of 6 indicating the company's financial situation is typical for a stable company.

NYSE:GWRE' s Piotroski F-Score Range Over the Past 10 Years
Min: 5   Max: 7
Current: 6

5
7

During the past 9 years, the highest Piotroski F-Score of Guidewire Software Inc was 7. The lowest was 5. And the median was 6.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

Guidewire Software Inc Annual Data

Jul09 Jul10 Jul11 Jul12 Jul13 Jul14 Jul15 Jul16 Jul17
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only 5.00 6.00 7.00 7.00 6.00

Guidewire Software Inc Quarterly Data

Oct12 Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Jan17 Apr17 Jul17
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 7.00 6.00 7.00 5.00 6.00

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.

How is the Piotroski F-Score calculated?

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Jul17) TTM:Last Year (Jul16) TTM:
Net Income was -7.858 + 3.974 + -1.819 + 26.927 = $21.2 Mil.
Cash Flow from Operations was -12.91 + 42.559 + 21.888 + 85.623 = $137.2 Mil.
Revenue was 94.127 + 115.621 + 123.436 + 181.1 = $514.3 Mil.
Gross Profit was 52.108 + 74.81 + 71.968 + 123.839 = $322.7 Mil.
Average Total Assets from the begining of this year (Jul16)
to the end of this year (Jul17) was
(916.178 + 903.394 + 951.914 + 1003.214 + 1078.901) / 5 = $970.7202 Mil.
Total Assets at the begining of this year (Jul16) was $916.2 Mil.
Long-Term Debt & Capital Lease Obligation was $0.0 Mil.
Total Current Assets was $679.2 Mil.
Total Current Liabilities was $163.6 Mil.
Net Income was -1.63 + 0.913 + -0.404 + 16.097 = $15.0 Mil.

Revenue was 82.28 + 102.129 + 98.86 + 141.177 = $424.4 Mil.
Gross Profit was 47.11 + 67.228 + 59.853 + 98.421 = $272.6 Mil.
Average Net Income from the begining of last year (Jul15)
to the end of last year (Jul16) was
(799.947 + 786.932 + 824.277 + 858.421 + 916.178) / 5 = $837.151 Mil.
Total Assets at the begining of last year (Jul15) was $799.9 Mil.
Long-Term Debt & Capital Lease Obligation was $0.0 Mil.
Total Current Assets was $707.7 Mil.
Total Current Liabilities was $119.1 Mil.

Profitability

Question 1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by Total Assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Guidewire Software Inc's current Net Income (TTM) was 21.2. ==> Positive ==> Score 1.

Question 2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by Total Assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Guidewire Software Inc's current Cash Flow from Operations (TTM) was 137.2. ==> Positive ==> Score 1.

Question 3. Change in Return on Assets

Compare this year's return on assets (1) to last year's return on assets.

Score 1 if it's higher, 0 if it's lower.

ROA (This Year)=Net Income/Total Assets(Jul16)
=21.224/916.178
=0.0231658

ROA (Last Year)=Net Income/Total Assets(Jul15)
=14.976/799.947
=0.01872124

Guidewire Software Inc's return on assets of this year was 0.0231658. Guidewire Software Inc's return on assets of last year was 0.01872124. ==> This year is higher. ==> Score 1.

Question 4. Quality of Earnings (Accrual)

Compare Cash flow return on assets (2) to return on assets (1)

Score 1 if CFROA > ROA, 0 if CFROA <= ROA.

Guidewire Software Inc's current Net Income (TTM) was 21.2. Guidewire Software Inc's current Cash Flow from Operations (TTM) was 137.2. ==> 137.2 > 21.2 ==> CFROA > ROA ==> Score 1.

Funding

Question 5. Change in Gearing or Leverage

Compare this year's gearing (long-term debt divided by average total assets) to last year's gearing.

Score 0 if this year's gearing is higher, 1 otherwise.

Guidewire Software Inc's gearing of this year was 0. Guidewire Software Inc's gearing of last year was 0. ==> This year is lower or equal to last year. ==> Score 1.

Question 6. Change in Working Capital (Liquidity)

Compare this year's current ratio (current assets divided by current liabilities) to last year's current ratio.

Score 1 if this year's current ratio is higher, 0 if it's lower

Current Ratio (This Year: Jul17)=Total Current Assets/Total Current Liabilities
=679.24/163.616
=4.15142773

Current Ratio (Last Year: Jul16)=Total Current Assets/Total Current Liabilities
=707.672/119.083
=5.94267864

Guidewire Software Inc's current ratio of this year was 4.15142773. Guidewire Software Inc's current ratio of last year was 5.94267864. ==> Last year's current ratio is higher ==> Score 0.

Question 7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 0 if there is larger number of shares in issue this year, 1 otherwise.

Guidewire Software Inc's number of shares in issue this year was 80.1. Guidewire Software Inc's number of shares in issue last year was 79.8. ==> There is larger number of shares in issue this year. ==> Score 0.

Efficiency

Question 8. Change in Gross Margin

Compare this year's gross margin (Gross Profit divided by sales) to last year's.

Score 1 if this year's gross margin is higher, 0 if it's lower.

Gross Margin (This Year: TTM)=Gross Profit/Revenue
=322.725/514.284
=0.62752293

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=272.612/424.446
=0.64227723

Guidewire Software Inc's gross margin of this year was 0.62752293. Guidewire Software Inc's gross margin of last year was 0.64227723. ==> Last year's gross margin is higher ==> Score 0.

Question 9. Change in asset turnover

Compare this year's asset turnover (total sales for the year divided by total assets at the beginning of the year) to last year's asset turnover ratio.

Score 1 if this year's asset turnover ratio is higher, 0 if it's lower

Asset Turnover (This Year)=Revenue/Total Assets at the Beginning of This Year (Jul16)
=514.284/916.178
=0.56133633

Asset Turnover (Last Year)=Revenue/Total Assets at the Beginning of Last Year (Jul15)
=424.446/799.947
=0.53059265

Guidewire Software Inc's asset turnover of this year was 0.56133633. Guidewire Software Inc's asset turnover of last year was 0.53059265. ==> This year's asset turnover is higher. ==> Score 1.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+1+1+1+1+0+0+0+1
=6

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Guidewire Software Inc has an F-score of 6 indicating the company's financial situation is typical for a stable company.

Explanation

The developer of the system is Joseph D. Piotroski is relatively unknown accounting professor who shuns publicity and rarely gives interviews.

He graduated from the University of Illinois with a B.S. in accounting in 1989, received an M.B.A. from Indiana University in 1994. Five years later, in 1999, after earning a Ph.D. in accounting from the University of Michigan, he became an associate professor of accounting at the University of Chicago.

In 2000, he wrote a research paper called "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers" (pdf).

He wanted to see if he can develop a system (using a simple nine-point scoring system) that can increase the returns of a strategy of investing in low price to book (referred to in the paper as high book to market) value companies.

What he found was something that exceeded his most optimistic expectations.

Buying only those companies that scored highest (8 or 9) on his nine-point scale, or F-Score as he called it, over the 20 year period from 1976 to 1996 led to an average out-performance over the market of 13.4%.

Even more impressive were the results of a strategy of investing in the highest F-Score companies (8 or 9) and shorting companies with the lowest F-Score (0 or 1).

Over the same period from 1976 to 1996 (20 years) this strategy led to an average yearly return of 23%, substantially outperforming the average S&P 500 index return of 15.83% over the same period.


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