Let's talk about the popular Guidewire Software, Inc. (NYSE:GWRE). The company's shares saw significant share price movement during recent months on the NYSE, rising to highs of US$218 and falling to the lows of US$167. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Guidewire Software's current trading price of US$175 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Guidewire Software’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

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Is Guidewire Software Still Cheap?

According to our valuation model, Guidewire Software seems to be fairly priced at around 9.10% above our intrinsic value, which means if you buy Guidewire Software today, you’d be paying a relatively reasonable price for it. And if you believe that the stock is really worth $160.73, there’s only an insignificant downside when the price falls to its real value. So, is there another chance to buy low in the future? Given that Guidewire Software’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

View our latest analysis for Guidewire Software

What does the future of Guidewire Software look like?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. In Guidewire Software's case, its revenues over the next few years are expected to grow by 53%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has already priced in GWRE’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on GWRE, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you'd like to know more about Guidewire Software as a business, it's important to be aware of any risks it's facing. In terms of investment risks, we've identified 1 warning sign with Guidewire Software , and understanding it should be part of your investment process.

If you are no longer interested in Guidewire Software, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.