In the latest trading session, ServiceNow (NOW) closed at $425.19, marking a -1.31% move from the previous day. This change lagged the S&P 500’s daily loss of 0.62%. Meanwhile, the Dow lost 0.69%, and the Nasdaq, a tech-heavy index, lost 0.94%.
Heading into today, shares of the maker of software that automates companies’ technology operations had gained 7.27% over the past month, outpacing the Computer and Technology sector’s gain of 2.56% and the S&P 500’s gain of 3.51% in that time.
Investors will be hoping for strength from NOW as it approaches its next earnings release, which is expected to be July 29, 2020. In that report, analysts expect NOW to post earnings of $1.02 per share. This would mark year-over-year growth of 43.66%. Our most recent consensus estimate is calling for quarterly revenue of $1.05 billion, up 25.58% from the year-ago period.
NOW’s full-year Zacks Consensus Estimates are calling for earnings of $4.24 per share and revenue of $4.34 billion. These results would represent year-over-year changes of +27.71% and +25.49%, respectively.
Any recent changes to analyst estimates for NOW should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company’s business outlook.
Our research shows that these estimate changes are directly correlated with near-term stock prices. 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 a Zacks Rank #3 (Hold).
Investors should also note NOW’s current valuation metrics, including its Forward P/E ratio of 101.5. This valuation marks a premium compared to its industry’s average Forward P/E of 35.85.
It is also worth noting that NOW currently has a PEG ratio of 3.59. 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. Computers – IT Services stocks are, on average, holding a PEG ratio of 2.24 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 169, which puts it in the bottom 34% 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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