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

·3 min read

In the latest trading session, ServiceNow (NOW) closed at $450.77, marking a +1.49% move from the previous day. The stock outpaced the S&P 500's daily gain of 0.66%. At the same time, the Dow added 0.61%, and the tech-heavy Nasdaq lost 0.02%.

Heading into today, shares of the maker of software that automates companies' technology operations had lost 13.96% over the past month, lagging the Computer and Technology sector's loss of 8.24% and the S&P 500's loss of 3.79% 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 $1.85 per share. This would mark year-over-year growth of 19.35%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.85 billion, up 22.59% from the year-ago period.

NOW's full-year Zacks Consensus Estimates are calling for earnings of $7.31 per share and revenue of $7.31 billion. These results would represent year-over-year changes of +23.48% and +23.97%, respectively.

It is also important to note the recent changes to analyst estimates for ServiceNow. 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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. Within the past 30 days, our consensus EPS projection has moved 0.32% lower. ServiceNow is currently a Zacks Rank #3 (Hold).

Investors should also note ServiceNow's current valuation metrics, including its Forward P/E ratio of 60.75. This represents a premium compared to its industry's average Forward P/E of 22.4.

Also, we should mention that NOW has a PEG ratio of 2.13. 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. NOW's industry had an average PEG ratio of 1.36 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 145, putting it in the bottom 43% 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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