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

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ServiceNow (NOW - Free Report) closed the most recent trading day at $574.37, moving +1.24% from the previous trading session. This move outpaced the S&P 500's daily gain of 1.22%. Meanwhile, the Dow gained 1.26%, and the Nasdaq, a tech-heavy index, added 4.63%.

Coming into today, shares of the maker of software that automates companies' technology operations had gained 15.09% in the past month. In that same time, the Computer and Technology sector gained 12.34%, while the S&P 500 gained 6.22%.

Wall Street will be looking for positivity from ServiceNow as it approaches its next earnings report date. In that report, analysts expect ServiceNow to post earnings of $2.05 per share. This would mark year-over-year growth of 26.54%. Our most recent consensus estimate is calling for quarterly revenue of $2.13 billion, up 21.52% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $9.59 per share and revenue of $8.81 billion. These totals would mark changes of +26.35% and +21.63%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for ServiceNow. These recent revisions tend to reflect the evolving nature of short-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. 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 0.34% higher. ServiceNow currently has a Zacks Rank of #1 (Strong Buy).

Investors should also note ServiceNow's current valuation metrics, including its Forward P/E ratio of 59.18. This represents a premium compared to its industry's average Forward P/E of 19.63.

Meanwhile, NOW's PEG ratio is currently 2.35. 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 2.05 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 102, which puts it in the top 41% 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.

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


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