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

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ServiceNow (NOW - Free Report) closed at $660.31 in the latest trading session, marking a +1.45% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.28%.

Coming into today, shares of the maker of software that automates companies' technology operations had gained 9.67% in the past month. In that same time, the Computer and Technology sector gained 5.05%, while the S&P 500 gained 3.07%.

Wall Street will be looking for positivity from NOW as it approaches its next earnings report date. In that report, analysts expect NOW to post earnings of $1.38 per share. This would mark year-over-year growth of 14.05%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.48 billion, up 28.06% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.80 per share and revenue of $5.83 billion, which would represent changes of +25.27% and +28.97%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for NOW. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 1.61% higher. NOW is currently a Zacks Rank #3 (Hold).

Looking at its valuation, NOW is holding a Forward P/E ratio of 112.26. This valuation marks a premium compared to its industry's average Forward P/E of 38.55.

Meanwhile, NOW's PEG ratio is currently 3.98. 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 1.97 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 175, which puts it in the bottom 32% 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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