ServiceNow (NOW) Stock Drops Despite Market Gains: Important Facts to Note
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The most recent trading session ended with ServiceNow (NOW) standing at $1,015.23, reflecting a -0.59% shift from the previouse trading day's closing. The stock's performance was behind the S&P 500's daily gain of 0.4%. On the other hand, the Dow registered a gain of 0.28%, and the technology-centric Nasdaq increased by 0.39%.
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The maker of software that automates companies' technology operations's shares have seen an increase of 6.94% over the last month, not keeping up with the Computer and Technology sector's gain of 11.04% and outstripping the S&P 500's gain of 6.69%.
The investment community will be closely monitoring the performance of ServiceNow in its forthcoming earnings report. On that day, ServiceNow is projected to report earnings of $3.53 per share, which would represent year-over-year growth of 12.78%. Meanwhile, our latest consensus estimate is calling for revenue of $3.12 billion, up 18.79% from the prior-year quarter.
Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $16.51 per share and revenue of $13.01 billion. These totals would mark changes of +18.61% and +18.42%, respectively, from last year.
Furthermore, it would be beneficial for investors to monitor any recent shifts in analyst projections for ServiceNow. These recent revisions tend to reflect the evolving nature of short-term business trends. Therefore, positive revisions in estimates convey analysts' confidence in the company's business performance and profit potential.
Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.
The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has shifted 0.27% upward. ServiceNow currently has a Zacks Rank of #3 (Hold).
In terms of valuation, ServiceNow is presently being traded at a Forward P/E ratio of 61.86. This valuation marks a premium compared to its industry's average Forward P/E of 20.46.
It's also important to note that NOW currently trades at a PEG ratio of 2.61. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company's projected earnings growth. The Computers - IT Services industry had an average PEG ratio of 2.19 as trading concluded yesterday.