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ServiceNow (NOW) Gains As Market Dips: What You Should Know

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ServiceNow (NOW - Free Report) closed at $538 in the latest trading session, marking a +1.9% move from the prior day. The stock outpaced the S&P 500's daily loss of 0.13%. Meanwhile, the Dow lost 0.23%, and the Nasdaq, a tech-heavy index, added 0.54%.

Coming into today, shares of the maker of software that automates companies' technology operations had gained 4.89% in the past month. In that same time, the Computer and Technology sector gained 4.87%, while the S&P 500 gained 3.5%.

Wall Street will be looking for positivity from NOW as it approaches its next earnings report date. On that day, NOW is projected to report earnings of $1.07 per share, which would represent year-over-year growth of 11.46%. Meanwhile, our latest consensus estimate is calling for revenue of $1.22 billion, up 27.96% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $4.56 per share and revenue of $4.49 billion, which would represent changes of +37.35% and +29.66%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for NOW. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. NOW is currently sporting a Zacks Rank of #3 (Hold).

Investors should also note NOW's current valuation metrics, including its Forward P/E ratio of 115.89. Its industry sports an average Forward P/E of 32.03, so we one might conclude that NOW is trading at a premium comparatively.

It is also worth noting that NOW currently has a PEG ratio of 4.09. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. NOW's industry had an average PEG ratio of 1.83 as of yesterday's close.

The Computers - IT Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 122, which puts it in the top 48% 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.

To follow NOW in the coming trading sessions, be sure to utilize Zacks.com.


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