Comparing PDF Solutions (NASDAQ:PDFS) & Guidewire Software (NYSE:GWRE)

PDF Solutions (NASDAQ:PDFS) and Guidewire Software (NYSE:GWRE) are both computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, valuation, profitability and risk.

Volatility and Risk

PDF Solutions has a beta of 1.52, suggesting that its stock price is 52% more volatile than the S&P 500. Comparatively, Guidewire Software has a beta of 1.19, suggesting that its stock price is 19% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
PDF Solutions	1.42%	4.83%	3.78%
Guidewire Software	-1.11%	-1.19%	-0.74%

Earnings & Valuation

This table compares PDF Solutions and Guidewire Software’s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PDF Solutions	$165.84 million	6.90	$3.11 million	$0.05	595.60
Guidewire Software	$905.34 million	13.14	-$111.86 million	($0.13)	-1,106.91

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

Institutional and Insider Ownership

79.5% of PDF Solutions shares are held by institutional investors. 11.2% of PDF Solutions shares are held by company insiders. Comparatively, 0.4% 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.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for PDF Solutions and Guidewire Software, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PDF Solutions	0	0	2	0	3.00
Guidewire Software	1	1	11	0	2.77

PDF Solutions currently has a consensus target price of $41.00, indicating a potential upside of 37.68%. Guidewire Software has a consensus target price of $137.31, indicating a potential downside of 4.59%. Given PDF Solutions’ stronger consensus rating and higher probable upside, equities analysts clearly believe PDF Solutions is more favorable than Guidewire Software.

Summary

PDF Solutions beats Guidewire Software on 11 of the 14 factors compared between the two stocks.

About PDF Solutions

PDF Solutions, Inc. provides proprietary software and physical intellectual property products for integrated circuit designs, electrical measurement hardware tools, proven methodologies, and professional services in the United States, China, Japan, and internationally. The company offers Exensio software products, such as Manufacturing Analytics that store collected data in a common environment with a consistent view for enabling product engineers to identify and analyze production yield, performance, reliability, and other issues; Process Control that provides failure detection and classification capabilities for monitoring, alarming, and controlling manufacturing tool sets; Test Operations that offer data collection and analysis capabilities; and Assembly Operations that provide device manufacturers with the capability to link assembly and packaging data, including fabrication and characterization data over the product life cycle. It also provides Design-For-Inspection (DFI) systems, such as DFI On-Chip Instruments; eProbe Non-Contact E-Beam Tool; and Characterization Vehicle (CV) system, which includes CV Test Chips and pdFasTest Electrical Testers, as well as Exensio characterization software, designed to analyze the measurements collected using the eProbe tool. In addition, the company offers Cimetrix software products that enables equipment manufacturers to provide industry standard interfaces on their products; and software-as-a-service, software related services, and characterization services. It sells its technologies and services through direct sales force, service teams, and strategic alliances to integrated device manufacturers, fabless semiconductor companies, foundries, equipment manufacturers, electronics manufacturing suppliers, original device manufacturers, out-sourced semiconductor assembly and test, and system houses. PDF Solutions, Inc. was founded in 1991 and is headquartered in Santa Clara, 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.