Dropbox (NASDAQ:DBX) and Guidewire Software (NYSE:GWRE) Critical Survey

Dropbox (NASDAQ:DBX) and Guidewire Software (NYSE:GWRE) are both computer and technology companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, valuation, institutional ownership, earnings, profitability, risk and analyst recommendations.

Volatility & Risk

Dropbox has a beta of 0.61, suggesting that its stock price is 39% less volatile than the S&P 500. Comparatively, Guidewire Software has a beta of 1.25, suggesting that its stock price is 25% more volatile than the S&P 500.

Institutional and Insider Ownership

94.8% of Dropbox shares are held by institutional investors. 28.6% of Dropbox shares are held by company insiders. Comparatively, 0.5% of Guidewire Software shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Dropbox and Guidewire Software’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Dropbox	17.75%	-132.63%	19.58%
Guidewire Software	2.91%	2.38%	1.38%

Analyst Ratings

This is a breakdown of current ratings for Dropbox and Guidewire Software, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Dropbox	0	2	1	0	2.33
Guidewire Software	1	2	10	0	2.69

Dropbox presently has a consensus price target of $27.67, suggesting a potential upside of 6.62%. Guidewire Software has a consensus price target of $204.50, suggesting a potential upside of 2.93%. Given Dropbox’s higher possible upside, equities research analysts clearly believe Dropbox is more favorable than Guidewire Software.

Earnings & Valuation

This table compares Dropbox and Guidewire Software”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Dropbox	$2.55 billion	3.15	$453.60 million	$1.41	18.40
Guidewire Software	$1.04 billion	16.02	-$6.10 million	$0.36	551.86

Dropbox has higher revenue and earnings than Guidewire Software. Dropbox is trading at a lower price-to-earnings ratio than Guidewire Software, indicating that it is currently the more affordable of the two stocks.

Summary

Dropbox beats Guidewire Software on 8 of the 14 factors compared between the two stocks.

About Dropbox

Dropbox, Inc. provides a content collaboration platform worldwide. The company's platform allows individuals, families, teams, and organizations to collaborate and sign up for free through its website or app, as well as upgrade to a paid subscription plan for premium features. It serves customers in professional services, technology, media, education, industrial, consumer and retail, and financial services industries. The company was formerly known as Evenflow, Inc. and changed its name to Dropbox, Inc. in October 2009. Dropbox, Inc. was incorporated in 2007 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.