Back to top

Image: Bigstock

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

Read MoreHide Full Article

In the latest trading session, ServiceNow (NOW - Free Report) closed at $648.57, marking a +0.72% move from the previous day. The stock outpaced the S&P 500's daily gain of 0.62%. Meanwhile, the Dow gained 0.55%, and the Nasdaq, a tech-heavy index, lost 0.03%.

Prior to today's trading, shares of the maker of software that automates companies' technology operations had lost 0.83% over the past month. This has was narrower than the Computer and Technology sector's loss of 1.01% and lagged the S&P 500's gain of 0.39% in that time.

Wall Street will be looking for positivity from ServiceNow as it approaches its next earnings report date. The company is expected to report EPS of $1.43, up 22.22% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.6 billion, up 28.06% from the year-ago period.

NOW's full-year Zacks Consensus Estimates are calling for earnings of $5.92 per share and revenue of $5.88 billion. These results would represent year-over-year changes of +27.86% and +30.13%, respectively.

Any recent changes to analyst estimates for ServiceNow should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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, 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. ServiceNow is holding a Zacks Rank of #3 (Hold) right now.

Digging into valuation, ServiceNow currently has a Forward P/E ratio of 108.81. This valuation marks a premium compared to its industry's average Forward P/E of 33.34.

It is also worth noting that NOW currently has a PEG ratio of 3.84. 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 1.42 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 116, which puts it in the top 46% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


ServiceNow, Inc. (NOW) - free report >>

Published in