ServiceNow (NOW) closed at $286.88 in the latest trading session, marking a +0.24% move from the prior day. The stock outpaced the S&P 500's daily of 0%. At the same time, the Dow added 0.08%, and the tech-heavy Nasdaq lost 0.18%.
Heading into today, shares of the maker of software that automates companies' technology operations had gained 1.75% over the past month, lagging the Computer and Technology sector's gain of 4.19% and the S&P 500's gain of 3.37% in that time.
Wall Street will be looking for positivity from NOW as it approaches its next earnings report date. The company is expected to report EPS of $0.88, up 14.29% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $942.59 million, up 31.75% from the year-ago period.
Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $3.24 per share and revenue of $3.45 billion. These totals would mark changes of +30.12% and +32.29%, respectively, from last year.
Investors might also notice recent changes to analyst estimates for NOW. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.
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.
The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. NOW is currently sporting a Zacks Rank of #3 (Hold).
In terms of valuation, NOW is currently trading at a Forward P/E ratio of 88.37. Its industry sports an average Forward P/E of 21.92, so we one might conclude that NOW is trading at a premium comparatively.
Also, we should mention that NOW has a PEG ratio of 3.16. 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. Computers - IT Services stocks are, on average, holding a PEG ratio of 1.98 based on yesterday's closing prices.
The Computers - IT Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 101, putting it in the top 40% 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.
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