Back to top

Image: Bigstock

ServiceNow (NOW) Stock Slides as Market Rises: Facts to Know Before You Trade

Read MoreHide Full Article

The latest trading session saw ServiceNow (NOW - Free Report) ending at $725.50, denoting a -0.42% adjustment from its last day's close. The stock's change was less than the S&P 500's daily gain of 0.77%. At the same time, the Dow added 0.49%, and the tech-heavy Nasdaq gained 0.95%.

Coming into today, shares of the maker of software that automates companies' technology operations had lost 4.77% in the past month. In that same time, the Computer and Technology sector lost 3.05%, while the S&P 500 gained 3.71%.

Investors will be eagerly watching for the performance of ServiceNow in its upcoming earnings disclosure. The company is forecasted to report an EPS of $2.85, showcasing a 20.25% upward movement from the corresponding quarter of the prior year. At the same time, our most recent consensus estimate is projecting a revenue of $2.61 billion, reflecting a 21.22% rise from the equivalent quarter last year.

For the full year, the Zacks Consensus Estimates are projecting earnings of $13.51 per share and revenue of $10.88 billion, which would represent changes of +25.32% and +21.31%, respectively, from the prior year.

Any recent changes to analyst estimates for ServiceNow should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To capitalize on this, we've crafted the Zacks Rank, a unique model that incorporates these estimate changes and offers a practical rating system.

The Zacks Rank system, running from #1 (Strong Buy) to #5 (Strong Sell), holds an admirable track record of superior performance, independently audited, with #1 stocks contributing an average annual return of +25% since 1988. Over the past month, there's been no change in the Zacks Consensus EPS estimate. Right now, ServiceNow possesses a Zacks Rank of #3 (Hold).

With respect to valuation, ServiceNow is currently being traded at a Forward P/E ratio of 53.93. Its industry sports an average Forward P/E of 26.08, so one might conclude that ServiceNow is trading at a premium comparatively.

It is also worth noting that NOW currently has a PEG ratio of 2.2. 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. The Computers - IT Services industry had an average PEG ratio of 2.88 as trading concluded yesterday.

The Computers - IT Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 144, which puts it in the bottom 43% of all 250+ industries.

The Zacks Industry Rank assesses the vigor of our specific industry groups by computing the average Zacks Rank of the individual stocks incorporated in the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow NOW in the coming trading sessions, be sure to utilize

See More Zacks Research for These Tickers

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

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

Published in