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ServiceNow (NOW) Dips More Than Broader Markets: What You Should Know

In the latest trading session, ServiceNow (NOW) closed at $164.23, marking a -1.52% move from the previous day. This move lagged the S&P 500's daily loss of 0.66%. Elsewhere, the Dow lost 0.99%, while the tech-heavy Nasdaq lost 1.63%.

Coming into today, shares of the maker of software that automates companies' technology operations had lost 14.52% in the past month. In that same time, the Computer and Technology sector lost 10.48%, while the S&P 500 lost 8.1%.

Investors will be hoping for strength from NOW as it approaches its next earnings release, which is expected to be January 30, 2019. The company is expected to report EPS of $0.67, up 91.43% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $718.21 million, up 31.45% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.35 per share and revenue of $2.61 billion, which would represent changes of +97.48% and +34.91%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for NOW. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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. The Zacks Consensus EPS estimate has moved 0.82% higher within the past month. NOW is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that NOW has a Forward P/E ratio of 70.92 right now. This represents a premium compared to its industry's average Forward P/E of 16.8.

Investors should also note that NOW has a PEG ratio of 2.73 right now. 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. The Computers - IT Services was holding an average PEG ratio of 1.63 at yesterday's closing price.

The Computers - IT Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 82, putting it in the top 32% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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