ServiceNow (NOW) Rises But Trails Market: What Investors Should Know
The most recent trading session ended with ServiceNow (NOW) standing at $741.06, reflecting a +0.12% shift from the previouse trading day's closing. The stock trailed the S&P 500, which registered a daily gain of 0.51%. Meanwhile, the Dow experienced a rise of 0.2%, and the technology-dominated Nasdaq saw an increase of 0.58%.
Shares of the maker of software that automates companies' technology operations have depreciated by 4.8% over the course of the past month, underperforming the Computer and Technology sector's gain of 1.47% and the S&P 500's gain of 2.94%.
The upcoming earnings release of ServiceNow will be of great interest to investors. In that report, analysts expect ServiceNow to post earnings of $3.13 per share. This would mark year-over-year growth of 32.07%. Meanwhile, our latest consensus estimate is calling for revenue of $2.58 billion, up 23.2% from the prior-year quarter.
Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $13.18 per share and revenue of $10.86 billion, indicating changes of +22.26% and +21.08%, respectively, compared to the previous year.
It's also important for investors to be aware of any recent modifications to analyst estimates for ServiceNow. These revisions typically reflect the latest short-term business trends, which can change frequently. Therefore, positive revisions in estimates convey analysts' confidence in the company's business performance and profit potential.
Our research shows that these estimate changes are directly correlated with near-term stock prices. To take advantage of this, we've established the Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational rating system.
The Zacks Rank system, ranging from #1 (Strong Buy) to #5 (Strong Sell), possesses a remarkable history of outdoing, externally audited, with #1 stocks returning an average annual gain of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. Right now, ServiceNow possesses a Zacks Rank of #3 (Hold).
Digging into valuation, ServiceNow currently has a Forward P/E ratio of 56.16. For comparison, its industry has an average Forward P/E of 28.41, which means ServiceNow is trading at a premium to the group.
Investors should also note that NOW has a PEG ratio of 2.18 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. By the end of yesterday's trading, the Computers - IT Services industry had an average PEG ratio of 2.53.
The Computers - IT Services industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 74, placing it within the top 30% of over 250 industries.
The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these 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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
ServiceNow, Inc. (NOW) : Free Stock Analysis Report
