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ServiceNow (NOW) Gains As Market Dips: What You Should Know

Zacks Equity Research

ServiceNow (NOW) closed at $388.83 in the latest trading session, marking a +0.57% move from the prior day. This move outpaced the S&P 500's daily loss of 0.78%. At the same time, the Dow lost 1.09%, and the tech-heavy Nasdaq gained 0.29%.

Wall Street will be looking for positivity from NOW as it approaches its next earnings report date. On that day, NOW is projected to report earnings of $1.02 per share, which would represent year-over-year growth of 43.66%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.05 billion, up 25.58% from the year-ago period.

NOW's full-year Zacks Consensus Estimates are calling for earnings of $4.24 per share and revenue of $4.34 billion. These results would represent year-over-year changes of +27.71% and +25.49%, respectively.

Investors might also notice recent changes to analyst estimates for NOW. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. NOW is currently a Zacks Rank #2 (Buy).

In terms of valuation, NOW is currently trading at a Forward P/E ratio of 91.09. This valuation marks a premium compared to its industry's average Forward P/E of 33.24.

Also, we should mention that NOW has a PEG ratio of 3.22. 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 industry currently had an average PEG ratio of 2.06 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 144, putting it in the bottom 44% 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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