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ServiceNow (NOW) Gains But Lags Market: What You Should Know

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ServiceNow (NOW) closed the most recent trading day at $492.54, moving +0.01% from the previous trading session. This change lagged the S&P 500's 0.31% gain on the day. Meanwhile, the Dow gained 0.05%, and the Nasdaq, a tech-heavy index, added 0.14%.

Heading into today, shares of the maker of software that automates companies' technology operations had gained 7.82% over the past month, outpacing the Computer and Technology sector's loss of 3.62% and the S&P 500's loss of 1.38% in that time.

Investors will be hoping for strength from ServiceNow as it approaches its next earnings release. On that day, ServiceNow is projected to report earnings of $1.54 per share, which would represent year-over-year growth of 8.45%. Our most recent consensus estimate is calling for quarterly revenue of $1.77 billion, up 25.45% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $7.31 per share and revenue of $7.42 billion. These totals would mark changes of +23.48% and +25.94%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for ServiceNow. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 4.25% lower. ServiceNow is currently a Zacks Rank #3 (Hold).

In terms of valuation, ServiceNow is currently trading at a Forward P/E ratio of 67.34. This represents a premium compared to its industry's average Forward P/E of 18.54.

Meanwhile, NOW's PEG ratio is currently 2.35. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. NOW's industry had an average PEG ratio of 0.94 as of yesterday's close.

The Computers - IT Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 103, putting it in the top 41% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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