ServiceNow (NOW) closed the most recent trading day at $554.09, moving +0.83% from the previous trading session. This move outpaced the S&P 500's daily loss of 0.23%. Meanwhile, the Dow lost 0.31%, and the Nasdaq, a tech-heavy index, lost 0.09%.
Heading into today, shares of the maker of software that automates companies' technology operations had 0% over the past month, outpacing the Computer and Technology sector's loss of 1.69% and the S&P 500's loss of 1.43% in that time.
Investors will be hoping for strength from ServiceNow as it approaches its next earnings release. In that report, analysts expect ServiceNow to post earnings of $2.54 per share. This would mark year-over-year growth of 29.59%. Our most recent consensus estimate is calling for quarterly revenue of $2.27 billion, up 24.07% from the year-ago period.
Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $9.99 per share and revenue of $8.9 billion. These totals would mark changes of +31.62% and +22.83%, 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.
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. Within the past 30 days, our consensus EPS projection remained stagnant. ServiceNow is currently a Zacks Rank #3 (Hold).
Valuation is also important, so investors should note that ServiceNow has a Forward P/E ratio of 55.01 right now. For comparison, its industry has an average Forward P/E of 24.85, which means ServiceNow is trading at a premium to the group.
Investors should also note that NOW has a PEG ratio of 1.99 right now. 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. The Computers - IT Services was holding an average PEG ratio of 2.2 at yesterday's closing price.
The Computers - IT Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 96, which puts it in the top 39% of all 250+ industries.
The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
You can find more information on all of these metrics, and much more, on Zacks.com.
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