Altair Engineering (NASDAQ:ALTR) and Guidewire Software (NYSE:GWRE) are both mid-cap construction companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, earnings, dividends, profitability, valuation and risk.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Altair Engineering and Guidewire Software, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Altair Engineering 0 3 5 0 2.63
Guidewire Software 0 3 7 0 2.70

Altair Engineering currently has a consensus target price of $38.00, indicating a potential downside of 6.79%. Guidewire Software has a consensus target price of $110.78, indicating a potential upside of 11.78%. Given Guidewire Software’s stronger consensus rating and higher possible upside, analysts clearly believe Guidewire Software is more favorable than Altair Engineering.

Earnings and Valuation

This table compares Altair Engineering and Guidewire Software’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Altair Engineering $333.33 million 8.55 -$99.40 million ($0.63) -64.71
Guidewire Software $661.07 million 12.08 -$19.66 million $0.09 1,101.11

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

Institutional and Insider Ownership

35.3% of Altair Engineering shares are held by institutional investors. 38.2% of Altair Engineering shares are held by insiders. Comparatively, 0.7% of Guidewire Software shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Altair Engineering -23.35% -21.85% -4.33%
Guidewire Software -2.97% 1.83% 1.41%

Summary

Guidewire Software beats Altair Engineering on 11 of the 13 factors compared between the two stocks.

About Altair Engineering

Altair Engineering Inc., together with its subsidiaries, provides enterprise-class engineering software worldwide. The company operates through two segments, Software and Client Engineering Services. Its integrated suite of multi-disciplinary computer aided engineering software optimizes design performance across various disciplines, including structures, motion, fluids, thermal management, electromagnetics, system modeling and embedded systems, as well as provides data analytics and true-to-life visualization and rendering. The company also offers client engineering services to support customers with long-term ongoing product design and development services, as well as consulting, training, and support services. Altair Engineering Inc. was founded in 1985 and is headquartered in Troy, Michigan.

About Guidewire Software

Guidewire Software, Inc. provides software products for property and casualty insurers. It offers Guidewire InsuranceNow, a cloud-based platform that offers policy, billing, and claims management functionality to insurers. The company's products include Guidewire InsuranceSuite comprising Guidewire PolicyCenter, an underwriting and policy administration application; Guidewire ClaimCenter, a lifecycle management application; Guidewire BillingCenter, manages billing, payment plans, agent commissions, and external payment systems; and Guidewire Underwriting Management, a cloud-based underwriting application. Its InsuranceSuite add-on applications consist of Guidewire Rating Management to manage the pricing of insurance products; Guidewire Reinsurance Management to use rules-based logic to execute reinsurance strategy through underwriting and claims processes; Guidewire Client Data Management to manage customer information; and Guidewire Product Content Management that provides software tools and standards-based line-of-business templates to introduce and modify insurance products. The company also provides data management and analytics products, such as Guidewire DataHub, a data store that unifies, standardizes, and stores data from insurer's systems and external sources; Guidewire InfoCenter that provides information for business intelligence, analysis, and enhanced decision making; Guidewire Live that aggregate data from internal and third-party sources, and analyze and visualize data; and Guidewire Predictive Analytics, a tool that allows insurers to make data-driven decisions. In addition, it offers Guidewire Digital Engagement Applications to provide digital experiences to customers, agents, vendors, and field personnel through their device of choice; and implementation and integration, maintenance support, and professional services, as well as Guidewire Production Services. The company was founded in 2001 and is headquartered in Foster City, California.

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