The latest trading session saw ServiceNow (NOW – Free Report) ending at $929.76, denoting a +0.96% adjustment from its last day’s close. The stock’s performance was behind the S&P 500’s daily gain of 1.59%. Meanwhile, the Dow experienced a rise of 1.39%, and the technology-dominated Nasdaq saw an increase of 1.63%.
Coming into today, shares of the maker of software that automates companies’ technology operations had lost 9.06% in the past month. In that same time, the Computer and Technology sector lost 3.43%, while the S&P 500 lost 2.42%.
Analysts and investors alike will be keeping a close eye on the performance of ServiceNow in its upcoming earnings disclosure. On that day, ServiceNow is projected to report earnings of $3.78 per share, which would represent year-over-year growth of 10.85%. Meanwhile, our latest consensus estimate is calling for revenue of $3.09 billion, up 18.55% from the prior-year quarter.
Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $16.24 per share and revenue of $13.04 billion, indicating changes of +16.67% and +18.69%, respectively, compared to the previous year.
Investors should also take note of any recent adjustments to analyst estimates for ServiceNow. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company’s business and profitability.
Our research suggests that these changes in estimates have a direct relationship with upcoming 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, 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, the Zacks Consensus EPS estimate has moved 0.62% lower. Right now, ServiceNow possesses a Zacks Rank of #3 (Hold).
From a valuation perspective, ServiceNow is currently exchanging hands at a Forward P/E ratio of 56.71. For comparison, its industry has an average Forward P/E of 25.69, which means ServiceNow is trading at a premium to the group.
It is also worth noting that NOW currently has a PEG ratio of 2.36. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company’s anticipated earnings growth rate. The Computers – IT Services industry had an average PEG ratio of 2.52 as trading concluded yesterday.
The Computers – IT Services industry is part of the Computer and Technology sector. With its current Zacks Industry Rank of 74, this industry ranks in the top 30% of all industries, numbering over 250.
The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. 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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