ServiceNow (NOW) is profitable, but the market is lagging: What you should know-October 7, 2020

ServiceNow (right now – Free Report)’s latest trading day closed at $500, an increase of 1.72% from the previous trading day. This change lags behind the 1.74% gain of the S&P 500 that day. At the same time, the Dow rose by 1.91% and the Nasdaq index rose by 1.88%.

Entering today, the stock price of a software manufacturer that automates technology operations has risen 10.92% in the past month. Over the same period, the computer and technology sectors fell 1.67%, while the S&P 500 index fell 1.86%.

Now, it will show its strength the next time it releases earnings. The company expects earnings per share of $1.04, an increase of 5.05% from the same period last year. At the same time, our latest consensus estimates that required revenue is $1.11 billion, an increase of 25.34% over the same period last year.

For the full year, our Zacks Consensus Estimates projected earnings per share of $4.45 and revenue of $4.41 billion, representing an increase of +34.04% and +27.38% over the previous year.

Investors may also notice changes in analysts’ latest estimates for NOW. These latest revisions tend to reflect the evolving nature of short-term business trends. Therefore, the positive estimate revision reflects analysts’ optimism about the company’s business and profitability.

Our research shows that these estimated changes are directly related to recent stock prices. Investors can take advantage of this by using Zacks Rank. The model takes into account the changes in these estimates and provides a simple and feasible rating system.

The Zacks Rank system ranks from #1 (strongly buy) to #5 (strongly sell). It has an outstanding, unaudited record of success, with an average annual return of +25% on the number one stock since 1988. In the past 30 days, our consensus EPS forecast has remained stagnant. NOW’s current Zacks Rank is #3 (hold).

Judging from its valuation, NOW’s forward P/E ratio remains at 110.48. Compared to its industry average forward price-earnings ratio of 26.63, this is a premium.

We can also see that the PEG ratio of NOW is now 3.82. This popular indicator is similar to the well-known P/E ratio, except that the PEG ratio also takes into account the company’s expected earnings growth rate. As of yesterday’s close, the current average PEG ratio for the computer-IT service industry is 2.53.

The computer-IT service industry belongs to the computer and technology industry. The group’s Zacks Industry Rank is 188, which is the bottom 26% of all 250+ industries.

The Zacks Industry Ranking measures the strength of our industry group by measuring the average Zacks ranking of individual stocks in the group. Our research shows that the top 50% of industries are two to one times higher than those in the second half.

You can find more information about all these indicators, and more information on Zacks.com.