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ServiceNow (NOW) Dips More Than Broader Markets: What You Should Know

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ServiceNow (NOW - Free Report) closed at $653.80 in the latest trading session, marking a -1.1% move from the prior day. This move lagged the S&P 500's daily loss of 0.13%.

Heading into today, shares of the maker of software that automates companies' technology operations had gained 14.81% over the past month, outpacing the Computer and Technology sector's gain of 4.3% and the S&P 500's gain of 2.07% in that time.

Investors will be hoping for strength from NOW as it approaches its next earnings release. On that day, NOW is projected to report earnings of $1.38 per share, which would represent 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.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $5.80 per share and revenue of $5.83 billion. These totals would mark changes of +25.27% and +28.97%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for NOW. Recent revisions tend to reflect the latest 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

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 has moved 1.61% higher. NOW is currently sporting a Zacks Rank of #3 (Hold).

Digging into valuation, NOW currently has a Forward P/E ratio of 114.03. For comparison, its industry has an average Forward P/E of 38, which means NOW is trading at a premium to the group.

Investors should also note that NOW has a PEG ratio of 4.05 right now. 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 2.02 based on yesterday's closing prices.

The Computers - IT Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 173, which puts it in the bottom 32% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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