GWRE
Guidewire Software, Inc.
$167.32
Platform & Compounding FCF
80%
Two-stage FCF DCF
Mild
·
Conviction
Overvalued
Trading 14.6% above fair value
You pay
$167.32
Bear
$78.76
Fair
$146.04
Bull
$231.77
Bear
$78.76
-52.9%
12% stage 1 growth, 11% discount
Fair
$146.04
-12.7%
21% stage 1 growth, 11% discount
Bull
$231.77
+38.5%
27% stage 1 growth, 11% discount
Adjust Assumptions
20.6%
11.0%
3.0%
Key Value Driver
FCF growth rate (21% base case)
Terminal Value % of EV
47%
Implied Market Multiple
54.9x
Market is pricing in (growth)
22.4%
vs 20.6% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (26 analysts)
$211.00
Divergence from AlphaVal
31%
Summary
Using a two-stage FCF DCF with 21% growth decelerating over 15 years, discounted at 11%, the base-case intrinsic value is $146.04 per share.
Warnings
Stock-based employee pay equals 131% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $211.00 (from 26 analysts). Our estimate is 31% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions