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

Zacks Equity Research

ServiceNow (NOW) closed at $302.31 in the latest trading session, marking a +1.19% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.23%. Elsewhere, the Dow gained 0.85%, while the tech-heavy Nasdaq lost 0.08%.

Coming into today, shares of the maker of software that automates companies' technology operations had gained 11.52% in the past month. In that same time, the Computer and Technology sector gained 5.16%, while the S&P 500 gained 3.84%.

Wall Street will be looking for positivity from NOW as it approaches its next earnings report date. This is expected to be July 24, 2019. The company is expected to report EPS of $0.64, up 30.61% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $830.92 million, up 31.67% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.20 per share and revenue of $3.44 billion, which would represent changes of +28.51% and +32.04%, respectively, from the prior year.

Any recent changes to analyst estimates for NOW should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-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.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. NOW is currently a Zacks Rank #2 (Buy).

Digging into valuation, NOW currently has a Forward P/E ratio of 93.26. This valuation marks a premium compared to its industry's average Forward P/E of 19.36.

Investors should also note that NOW has a PEG ratio of 3.33 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Computers - IT Services industry currently had an average PEG ratio of 1.73 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 107, putting it in the top 42% 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.

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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