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ServiceNow (NOW) Surpasses Market Returns: Some Facts Worth Knowing

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In the latest market close, ServiceNow (NOW - Free Report) reached $685.74, with a +1% movement compared to the previous day. The stock outpaced the S&P 500's daily gain of 0.38%. At the same time, the Dow added 1.47%, and the tech-heavy Nasdaq lost 0.23%.

Coming into today, shares of the maker of software that automates companies' technology operations had gained 14.4% in the past month. In that same time, the Computer and Technology sector gained 14.04%, while the S&P 500 gained 10.72%.

Market participants will be closely following the financial results of ServiceNow in its upcoming release. The company is expected to report EPS of $2.78, up 21.93% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $2.4 billion, up 23.47% from the year-ago period.

In terms of the entire fiscal year, the Zacks Consensus Estimates predict earnings of $10.44 per share and a revenue of $8.93 billion, indicating changes of +37.55% and +23.27%, respectively, from the former year.

It is also important to note the recent changes to analyst estimates for ServiceNow. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the company's business health and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has shifted 0.99% upward. Right now, ServiceNow possesses a Zacks Rank of #2 (Buy).

From a valuation perspective, ServiceNow is currently exchanging hands at a Forward P/E ratio of 65.04. This expresses a premium compared to the average Forward P/E of 24.82 of its industry.

It is also worth noting that NOW currently has a PEG ratio of 2.3. 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. By the end of yesterday's trading, the Computers - IT Services industry had an average PEG ratio of 2.3.

The Computers - IT Services industry is part of the Computer and Technology sector. This industry, currently bearing a Zacks Industry Rank of 59, finds itself in the top 24% echelons 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 use to monitor all these stock-influencing metrics, and more, throughout the forthcoming trading sessions.

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