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

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The latest trading session saw ServiceNow (NOW - Free Report) ending at $1,073.77, denoting a +1.84% adjustment from its last day's close. The stock exceeded the S&P 500, which registered a gain of 1.26% for the day. Meanwhile, the Dow experienced a rise of 0.8%, and the technology-dominated Nasdaq saw an increase of 1.77%.

Coming into today, shares of the maker of software that automates companies' technology operations had lost 6.17% in the past month. In that same time, the Computer and Technology sector gained 0.84%, while the S&P 500 lost 2.82%.

Investors will be eagerly watching for the performance of ServiceNow in its upcoming earnings disclosure. It is anticipated that the company will report an EPS of $3.60, marking a 15.76% rise compared to the same quarter of the previous year. Meanwhile, our latest consensus estimate is calling for revenue of $2.96 billion, up 21.3% from the prior-year quarter.

Investors might also notice recent changes to analyst estimates for ServiceNow. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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, stretching from #1 (Strong Buy) to #5 (Strong Sell), has a noteworthy track record of outperforming, validated by third-party audits, with stocks rated #1 producing an average annual return of +25% since the year 1988. Over the past month, there's been no change in the Zacks Consensus EPS estimate. ServiceNow is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, ServiceNow is presently being traded at a Forward P/E ratio of 64.28. For comparison, its industry has an average Forward P/E of 27.47, which means ServiceNow is trading at a premium to the group.

We can also see that NOW currently has a PEG ratio of 2.61. 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 currently had an average PEG ratio of 2.56 as of yesterday's close.

The Computers - IT Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 87, putting it in the top 35% 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.

Don't forget to use Zacks.com to keep track of all these stock-moving metrics, and others, in the upcoming trading sessions.


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