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ServiceNow (NOW) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

In the latest trading session, ServiceNow (NOW) closed at $278.06, marking a +1.46% move from the previous day. This move outpaced the S&P 500's daily gain of 1.45%. Elsewhere, the Dow gained 1.22%, while the tech-heavy Nasdaq added 0.78%.

Coming into today, shares of the maker of software that automates companies' technology operations had lost 5.7% in the past month. In that same time, the Computer and Technology sector lost 5.61%, while the S&P 500 lost 7.42%.

Wall Street will be looking for positivity from NOW as it approaches its next earnings report date. This is expected to be April 29, 2020. The company is expected to report EPS of $0.96, up 43.28% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $1.02 billion, up 29.54% from the prior-year quarter.

NOW's full-year Zacks Consensus Estimates are calling for earnings of $4.20 per share and revenue of $4.36 billion. These results would represent year-over-year changes of +26.51% and +26.03%, respectively.

It is also important to note the recent changes to analyst estimates for NOW. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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.

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. Within the past 30 days, our consensus EPS projection has moved 15.31% lower. NOW currently has a Zacks Rank of #3 (Hold).

Looking at its valuation, NOW is holding a Forward P/E ratio of 65.25. This valuation marks a premium compared to its industry's average Forward P/E of 19.56.

Meanwhile, NOW's PEG ratio is currently 2.25. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Computers - IT Services industry currently had an average PEG ratio of 1.54 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 93, putting it in the top 37% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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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