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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 $295.65, moving +0.94% from the previous trading session. This change outpaced the S&P 500's 0.49% gain on the day. Elsewhere, the Dow gained 0.57%, while the tech-heavy Nasdaq added 0.67%.

Coming into today, shares of the maker of software that automates companies' technology operations had gained 9.79% in the past month. In that same time, the Computer and Technology sector gained 5.11%, while the S&P 500 gained 3.03%.

Investors will be hoping for strength from NOW as it approaches its next earnings release, which is expected to be January 29, 2020. The company is expected to report EPS of $0.88, up 14.29% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $942.59 million, up 31.75% from the prior-year quarter.

It is also important to note the recent changes to analyst estimates for NOW. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. NOW is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, NOW is currently trading at a Forward P/E ratio of 68.6. For comparison, its industry has an average Forward P/E of 20.2, which means NOW is trading at a premium to the group.

Also, we should mention that NOW has a PEG ratio of 2.45. 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. The Computers - IT Services was holding an average PEG ratio of 1.9 at yesterday's closing price.

The Computers - IT Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 198, which puts it in the bottom 23% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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