Is Service Now Inc (NOW) stock trading below fair value?

investor supervisor Gives ServiceNow Inc. (NOW) a weak evaluation score of 2 from its analysis. Proprietary scoring systems consider a company’s underlying health by analyzing its stock price, earnings and growth rate. Now currently holds a better value than the 2% stock based on these metrics. Long-term investors should consider buying and holding the most relevant valuation ranking system when making investment decisions.

metrics analysis

Now has a previous twelve-month price-to-earnings (PE) ratio of 740.2. The historical average of around 15% now shows a poor value for the stock because investors are paying higher share prices than the company’s earnings. A high trailing PE ratio of Now indicates that the firm has been trading above its fair market value recently. Its 12-month earnings per share (EPS) of 0.85 doesn’t justify the stock’s current price. However, the previous PE ratio does not factor into the projected growth rate of the company, resulting in high PE ratios due to the high growth potential in many new firms that attract investors despite insufficient earnings. The 12-month forward PE to Growth (PEG) ratio as of now stands at 15.94. Markets are now pricing higher in relation to its projected growth as its PEG ratio is currently above its fair market value of 1. The PEG of 0.850000023 is its forward price-to-earnings ratio divided by its growth rate. The PEG ratio is one of the most commonly used valuation metrics because it incorporates more company fundamental metrics and focuses on the firm’s future rather than its past.

Summary

NOW’s weak valuation at current share price is due to the high PEG ratio despite strong growth. Now’s PE and PEG are worse than the market average, making valuations below average. Click here for a Full Report on Service Now Inc (NOW) Stock.