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ServiceNow (NOW) Outpaces Stock Market Gains: What You Should Know
ServiceNow (NOW - Free Report) closed the most recent trading day at $440.47, moving +1.61% from the previous trading session. This move outpaced the S&P 500's daily gain of 0.3%. At the same time, the Dow added 0.24%, and the tech-heavy Nasdaq gained 0.34%.
Heading into today, shares of the maker of software that automates companies' technology operations had lost 1.44% over the past month, lagging the Computer and Technology sector's gain of 5.82% and the S&P 500's loss of 1.21% in that time.
ServiceNow will be looking to display strength as it nears its next earnings release. On that day, ServiceNow is projected to report earnings of $2.02 per share, which would represent year-over-year growth of 16.76%. Our most recent consensus estimate is calling for quarterly revenue of $2.09 billion, up 21.39% from the year-ago period.
Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $9.15 per share and revenue of $8.85 billion. These totals would mark changes of +20.55% and +22.2%, respectively, from last year.
Investors should also note any recent changes to analyst estimates for ServiceNow. 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.
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.
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. Within the past 30 days, our consensus EPS projection has moved 1.18% lower. ServiceNow is currently a Zacks Rank #3 (Hold).
Investors should also note ServiceNow's current valuation metrics, including its Forward P/E ratio of 47.37. For comparison, its industry has an average Forward P/E of 22.55, which means ServiceNow is trading at a premium to the group.
Meanwhile, NOW's PEG ratio is currently 1.67. 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. Computers - IT Services stocks are, on average, holding a PEG ratio of 1.41 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 146, which puts it in the bottom 43% of all 250+ industries.
The Zacks Industry Rank gauges the strength of our individual 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.