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

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In the latest trading session, ServiceNow (NOW - Free Report) closed at $421.81, marking a +1.92% move from the previous day. This move outpaced the S&P 500's daily gain of 0.29%. Meanwhile, the Dow lost 0.24%, and the Nasdaq, a tech-heavy index, added 0.28%.

Coming into today, shares of the maker of software that automates companies' technology operations had gained 3.2% in the past month. In that same time, the Computer and Technology sector gained 4.98%, while the S&P 500 gained 2.96%.

Investors will be hoping for strength from NOW as it approaches its next earnings release, which is expected to be July 29, 2020. In that report, analysts expect NOW to post earnings of $1.02 per share. This would mark year-over-year growth of 43.66%. Our most recent consensus estimate is calling for quarterly revenue of $1.05 billion, up 25.58% from the year-ago period.

NOW's full-year Zacks Consensus Estimates are calling for earnings of $4.24 per share and revenue of $4.34 billion. These results would represent year-over-year changes of +27.71% and +25.49%, respectively.

Investors might also notice 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.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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. The Zacks Consensus EPS estimate remained stagnant within the past month. NOW is currently a Zacks Rank #3 (Hold).

Digging into valuation, NOW currently has a Forward P/E ratio of 97.51. This represents a premium compared to its industry's average Forward P/E of 34.67.

Meanwhile, NOW's PEG ratio is currently 3.45. 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. The Computers - IT Services was holding an average PEG ratio of 2.3 at yesterday's closing price.

The Computers - IT Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 194, which puts it in the bottom 24% 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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