ServiceNow (NOW) Laps the Stock Market: Here's Why
ServiceNow (NOW) closed at $660.11 in the latest trading session, marking a +0.48% move from the prior day. The stock exceeded the S&P 500, which registered a gain of 0.11% for the day. At the same time, the Dow lost 0.3%, and the tech-heavy Nasdaq gained 0.56%.
Shares of the maker of software that automates companies' technology operations have depreciated by 8.33% over the course of the past month, underperforming the Computer and Technology sector's gain of 7.61% and the S&P 500's gain of 5.06%.
The investment community will be paying close attention to the earnings performance of ServiceNow in its upcoming release. In that report, analysts expect ServiceNow to post earnings of $2.85 per share. This would mark year-over-year growth of 20.25%. Our most recent consensus estimate is calling for quarterly revenue of $2.61 billion, up 21.22% from the year-ago period.
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.
Investors should also take note of any recent adjustments to analyst estimates for ServiceNow. These latest adjustments often mirror the shifting dynamics of short-term business patterns. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.
Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. 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 last 30 days, the Zacks Consensus EPS estimate has remained unchanged. As of now, ServiceNow holds a Zacks Rank of #3 (Hold).
From a valuation perspective, ServiceNow is currently exchanging hands at a Forward P/E ratio of 48.63. This represents a premium compared to its industry's average Forward P/E of 25.46.
Investors should also note that NOW has a PEG ratio of 1.98 right now. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company's projected earnings growth. The Computers - IT Services industry currently had an average PEG ratio of 2.84 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 145, putting it in the bottom 43% of all 250+ industries.
The Zacks Industry Rank is ordered 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.
Remember to apply Zacks.com to follow these and more stock-moving metrics during the upcoming trading sessions.
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ServiceNow, Inc. (NOW) : Free Stock Analysis Report
