Clearwater Analytics Holdings Inc (CWAN, Financial), a prominent player in the software industry, has recently witnessed a notable fluctuation in its stock performance. With a current market capitalization of $4.72 billion and a stock price of $21.58, CWAN has experienced a 3.50% decline over the past week. However, looking at a broader timeline, the stock has surged by 23.89% over the past three months. According to the GF Value, which stands at $19.76, the stock is considered Fairly Valued, suggesting that its current price aligns closely with its intrinsic value.
Company Overview
Clearwater Analytics Holdings Inc specializes in providing SaaS solutions for investment data services, primarily catering to clients in the U.S. The company's offerings include automated investment data aggregation, reconciliation, accounting, and reporting services. These services are tailored for insurers, investment managers, corporations, institutional investors, and government entities. The majority of Clearwater's revenue is generated from its SaaS platform, supplemented by software licenses and professional services.
Assessing Profitability
Despite its innovative solutions, Clearwater's financial health, as indicated by its Profitability Rank of 3/10, shows room for improvement. The company's Operating Margin stands at -2.74%, which is better than 36.45% of its peers in the industry. Additionally, its Return on Equity (ROE) and Return on Assets (ROA) are -4.68% and -2.90% respectively, positioning it better than approximately one-third of its competitors. The Return on Invested Capital (ROIC) is also low at -4.66%, yet it surpasses 35% of industry counterparts. Notably, Clearwater has only been profitable for one year over the past decade.
Growth Trajectory
Clearwater Analytics has demonstrated robust growth metrics. The company's 3-Year Revenue Growth Rate per Share is an impressive 16.20%, outperforming 66.72% of its industry peers. Looking ahead, the estimated Total Revenue Growth Rate for the next three to five years is projected at 18.94%, which is superior to 76.33% of competitors. Furthermore, the 3-Year EPS without NRI Growth Rate stands at 24.50%, better than 69.41% of similar companies. These figures indicate a strong upward trajectory in Clearwater's financial performance.
Investor Confidence
Clearwater Analytics enjoys the confidence of notable investors. Ron Baron (Trades, Portfolio) leads as the top holder with 5,359,172 shares, representing 2.46% of the company. Following him is Jim Simons, holding 873,100 shares, and Jefferies Group (Trades, Portfolio) with 125,900 shares. These investments reflect a strong belief in the company's potential and strategic direction.
Competitive Landscape
In comparison to its competitors, Clearwater Analytics stands among giants like Vertex Inc (VERX, Financial) with a market cap of $6.16 billion, Lyft Inc (LYFT, Financial) at $4.9 billion, and Pegasystems Inc (PEGA, Financial) valued at $5.97 billion. Each of these companies shares a similar market space in the software industry, making the competition intense but also highlighting Clearwater's significant role within the sector.
Conclusion
Clearwater Analytics Holdings Inc's recent stock performance and financial metrics paint a mixed picture. While the company shows strong growth potential and investor confidence, its profitability metrics suggest areas needing improvement. The stock's current valuation as Fairly Valued according to the GF Value indicates a balance between market expectations and the company's intrinsic value. Investors should keep an eye on how Clearwater manages its profitability challenges while capitalizing on its growth opportunities in the competitive software industry landscape.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
