ServiceNow (NOW) closed at $917.74 in the latest trading session, marking a -1.17% move from the prior day. This move lagged the S&P 500's daily loss of 0.64%. Meanwhile, the Dow lost 0.2%, and the Nasdaq, a tech-heavy index, lost 1.15%.
Coming into today, shares of the maker of software that automates companies' technology operations had lost 1.54% in the past month. In that same time, the Computer and Technology sector gained 2.91%, while the S&P 500 gained 1.91%.
The upcoming earnings release of ServiceNow will be of great interest to investors. The company is forecasted to report an EPS of $4.22, showcasing a 13.44% upward movement from the corresponding quarter of the prior year. At the same time, our most recent consensus estimate is projecting a revenue of $3.35 billion, reflecting a 19.88% rise from the equivalent quarter last year.
For the entire fiscal year, the Zacks Consensus Estimates are projecting earnings of $16.79 per share and a revenue of $13.14 billion, representing changes of +20.62% and +19.64%, respectively, from the prior year.
Additionally, investors should keep an eye on any recent revisions to analyst forecasts for ServiceNow. These latest adjustments often mirror the shifting dynamics of short-term business patterns. With this in mind, we can consider positive estimate revisions a sign of optimism about the business outlook.
Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. 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, 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 past month, there's been a 0.1% fall in the Zacks Consensus EPS estimate. Currently, ServiceNow is carrying a Zacks Rank of #3 (Hold).
In terms of valuation, ServiceNow is currently trading at a Forward P/E ratio of 55.3. This denotes a premium relative to the industry average Forward P/E of 16.87.
It's also important to note that NOW currently trades at a PEG ratio of 2.32. 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. As of the close of trade yesterday, the Computers – IT Services industry held an average PEG ratio of 2.11.
