ServiceNow (NOW) Sees a More Significant Dip Than Broader Market: Some Facts to Know

ServiceNow (NOW) ended the recent trading session at $108.01, demonstrating a -1.18% change from the preceding day's closing price. The stock's performance was behind the S&P 500's daily loss of 0.43%. Meanwhile, the Dow experienced a drop of 1.05%, and the technology-dominated Nasdaq saw a decrease of 0.92%.

Shares of the maker of software that automates companies' technology operations witnessed a loss of 6.37% over the previous month, trailing the performance of the Computer and Technology sector with its loss of 3.21%, and the S&P 500's loss of 0.5%.

The upcoming earnings release of ServiceNow will be of great interest to investors. The company is predicted to post an EPS of $0.95, indicating a 17.28% growth compared to the equivalent quarter last year. Meanwhile, our latest consensus estimate is calling for revenue of $3.75 billion, up 21.39% from the prior-year quarter.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $4.13 per share and revenue of $15.98 billion, indicating changes of +17.66% and +20.32%, respectively, compared to the previous year.

It's also important for investors to be aware of any recent modifications to analyst estimates for ServiceNow. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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 moved 4.43% higher. ServiceNow is holding a Zacks Rank of #3 (Hold) right now.

In the context of valuation, ServiceNow is at present trading with a Forward P/E ratio of 26.49. For comparison, its industry has an average Forward P/E of 12.99, which means ServiceNow is trading at a premium to the group.

One should further note that NOW currently holds a PEG ratio of 1.11. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. As of the close of trade yesterday, the Computers - IT Services industry held an average PEG ratio of 1.19.

The Computers - IT Services industry is part of the Computer and Technology sector. With its current Zacks Industry Rank of 79, this industry ranks in the top 33% of all industries, numbering over 250.

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.

To follow NOW in the coming trading sessions, be sure to utilize Zacks.com.

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This article originally published on Zacks Investment Research (zacks.com).

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