ServiceNow (NOW – Free Report) closed at $842.93 in the latest trading session, marking a -0.17% move from the prior day. This move lagged the S&P 500’s daily gain of 0.64%. On the other hand, the Dow registered a gain of 0.85%, and the technology-centric Nasdaq increased by 0.31%.
Coming into today, shares of the maker of software that automates companies’ technology operations had lost 14.42% in the past month. In that same time, the Computer and Technology sector lost 11.22%, while the S&P 500 lost 7.69%.
The upcoming earnings release of ServiceNow will be of great interest to investors. In that report, analysts expect ServiceNow to post earnings of $3.78 per share. This would mark 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 pay attention to any latest changes in analyst estimates for ServiceNow. These recent revisions tend to reflect the evolving nature of short-term business trends. 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 utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.
The Zacks Rank system, ranging from #1 (Strong Buy) to #5 (Strong Sell), possesses a remarkable history of outdoing, externally audited, with #1 stocks returning an average annual gain of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has remained unchanged. At present, ServiceNow boasts a Zacks Rank of #3 (Hold).
In the context of valuation, ServiceNow is at present trading with a Forward P/E ratio of 51.99. This signifies a premium in comparison to the average Forward P/E of 21.93 for its industry.
One should further note that NOW currently holds a PEG ratio of 2.16. 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 average PEG ratio for the Computers – IT Services industry stood at 2.04 at the close of the market yesterday.
The Computers – IT Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 79, putting it in the top 32% 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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