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ServiceNow (NOW) Gains But Lags Market: What You Should Know

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ServiceNow (NOW - Free Report) closed the most recent trading day at $497.05, moving +0.76% from the previous trading session. This move lagged the S&P 500's daily gain of 1.5%. Elsewhere, the Dow gained 1.12%, while the tech-heavy Nasdaq added 0.32%.

Coming into today, shares of the maker of software that automates companies' technology operations had lost 2.4% in the past month. In that same time, the Computer and Technology sector lost 7.02%, while the S&P 500 lost 6.54%.

ServiceNow will be looking to display strength as it nears its next earnings release. In that report, analysts expect ServiceNow to post earnings of $1.54 per share. This would mark year-over-year growth of 8.45%. Meanwhile, our latest consensus estimate is calling for revenue of $1.77 billion, up 25.45% from the prior-year quarter.

NOW's full-year Zacks Consensus Estimates are calling for earnings of $7.31 per share and revenue of $7.42 billion. These results would represent year-over-year changes of +23.48% and +25.94%, respectively.

Investors should also note any recent changes to analyst estimates for ServiceNow. These revisions typically reflect the latest short-term business trends, which can change frequently. 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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. Within the past 30 days, our consensus EPS projection remained stagnant. ServiceNow is holding a Zacks Rank of #3 (Hold) right now.

In terms of valuation, ServiceNow is currently trading at a Forward P/E ratio of 67.45. This represents a premium compared to its industry's average Forward P/E of 16.67.

Meanwhile, NOW's PEG ratio is currently 2.36. 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. Computers - IT Services stocks are, on average, holding a PEG ratio of 0.89 based on yesterday's closing prices.

The Computers - IT Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 92, putting it in the top 37% 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.

Make sure to utilize to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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