ServiceNow (NOW) closed at $615.63 in the latest trading session, marking a +1.09% move from the prior day. This move outpaced the S&P 500’s daily loss of 1.03%. Elsewhere, the Dow lost 1.48%, while the tech-heavy Nasdaq lost 0.2%.
Coming into today, shares of the maker of software that automates companies’ technology operations had lost 9.89% in the past month. In that same time, the Computer and Technology sector lost 4.42%, while the S&P 500 lost 0.62%.
ServiceNow will be looking to display strength as it nears its next earnings release. In that report, analysts expect ServiceNow to post earnings of $1.43 per share. This would mark year-over-year growth of 22.22%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.6 billion, up 28.06% from the year-ago period.
Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $5.92 per share and revenue of $5.88 billion. These totals would mark changes of +27.86% and +30.13%, respectively, from last year.
It is also important to note the recent changes to analyst estimates for ServiceNow. 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.
Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.
The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. ServiceNow is holding a Zacks Rank of #3 (Hold) right now.
In terms of valuation, ServiceNow is currently trading at a Forward P/E ratio of 102.91. This valuation marks a premium compared to its industry’s average Forward P/E of 32.56.
We can also see that NOW currently has a PEG ratio of 3.63. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company’s expected earnings growth rate into account. Computers – IT Services stocks are, on average, holding a PEG ratio of 1.63 based on yesterday’s closing prices.
The Computers – IT Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 157, which puts it in the bottom 39% 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.
Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.
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