Markets Fall Again, But These 2 Stocks Are Heading Higher

The stock market did not seem inspired by the long holiday weekend as continued concerns about inflation, possible recession and macroeconomic and geopolitical factors weighed on investor sentiment.

At the end of the day Tuesday, the Dow Jones Industrial Average (^ DJI -0.55%), S&P 500 (^GSPC -0.41%)Y Nasdaq Composite (^IXIC 0.00%) all ended lower, and while none of them fell more than three-quarters of a percentage point, they continued to show signs of weakness after a solid summer rally.

Index

Daily percentage change

daily point change

dow

(0.55%)

(173)

S&P 500

(0.41%)

(sixteen)

nasdaq

(0.74%)

(86)

Data source: Yahoo! Finance.

However, after the regular market session ended, some positive financial reports from a couple of software stocks helped boost confidence among tech investors. Read below and find out why investors in cupa software (BLOW -2.04%) Y guide software (GWRE -1.93%) they were pleased with what their respective companies had to say on Tuesday afternoon.

cup of grace

Shares of Coupa Software were up nearly 13% in after-hours trading on Tuesday afternoon. The maker of software for managing business expenses enjoyed a strong quarter and pointed the way to greater success in the near future.

Coupa’s fiscal second quarter results for the period ending July 31 were somewhat mixed. On the bright side, sales were up 18% to $211 million, fueled by a 23% increase in subscription-based revenue. Coupa said a significant number of new clients have joined its client ranks and it has expanded its presence in Latin America with new offices in Mexico, Brazil and Colombia. However, adjusted net income was down almost 20% year-over-year to $16.5 million, leading to adjusted earnings of $0.20 per share.

Still, Coupa investors were keen to see a better time ahead. The software company projected full-year revenue of between $838 million and $844 million, with adjusted earnings likely to weigh between $0.37 and $0.44 per share. Investors also liked Coupa’s authorization of a $100 million share buyback program, indicating the company’s confidence in its share price.

Coupa shares are still down 75% from where they traded in October 2021, even after today’s late rally. If the company can restart its growth engines, then Coupa shares could have a long way to go to recover.

a guiding light

Elsewhere, shares of Guidewire Software were up more than 6% after hours on Tuesday. Financial results for the fiscal fourth quarter of the insurance cloud software platform specialist did not paint the most optimistic pictures, but investors seemed pleased with the direction in which the company is headed.

Guidewire’s numbers didn’t show amazing strength. Revenue of $245 million was up just 7% year-over-year, though part of the slowdown reflected a transition from license-based sales to recurring revenue. Subscription and support revenue increased 34% from prior year levels. However, adjusted net income fell more than 90% year over year, resulting in adjusted earnings of just $0.03 per share.

However, CEO Mike Rosenbaum was pleased with the progress Guidewire has made in transitioning its insurance clients to core cloud-based systems. Guidewire won 16 cloud deals in the fourth fiscal quarter alone, expanding relationships with existing customers and attracting new ones as well.

Investors also liked Guidewire’s guidance. The company expects fiscal 2023 revenue of between $885 million and $895 million, with annualized recurring revenue accounting for approximately 85% of its total sales. That would indicate the long-term success of Guidewire’s transition.

Guidewire has come a long way since early 2022, and investors are excited about its strategic vision. If the company can continue to serve insurance providers well, then it could enjoy tremendous growth in the years to come.

Dan Caplinger has no position in any of the mentioned stocks. The Motley Fool has positions and recommends Coupa Software. The Motley Fool recommends Guidewire software. The Motley Fool has a disclosure policy.

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