Investors in Guidewire Software (NYSE:GWRE) have made a decent return of 71% over the past five years

Guidewire Software, Inc. (NYSE:GWRE) shareholders might be concerned after seeing the share price drop 22% in the last quarter. But at least the stock is up over the last five years. In that time, it is up 71%, which isn't bad, but is below the market return of 105%.

So let's investigate and see if the longer term performance of the company has been in line with the underlying business' progress.

See our latest analysis for Guidewire Software

Guidewire Software isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last 5 years Guidewire Software saw its revenue grow at 9.9% per year. That's a fairly respectable growth rate. The annual gain of 11% over five years is better than nothing, but falls short of the market. Arguably, that means, the market (previously) expected stronger growth from the company.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

Guidewire Software is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So it makes a lot of sense to check out what analysts think Guidewire Software will earn in the future (free analyst consensus estimates)

A Different Perspective

While the broader market gained around 4.1% in the last year, Guidewire Software shareholders lost 24%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 11% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Guidewire Software , and understanding them should be part of your investment process.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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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.