ServiceNow (NOW) Stock Sinks As Market Gains: What You Should Know

ServiceNow (NOW) closed the most recent trading day at $460.12, moving -0.08% from the previous trading session. This move lagged the S&P 500's daily gain of 0.3%. At the same time, the Dow added 0.2%, and the tech-heavy Nasdaq gained 0.37%.

Prior to today's trading, shares of the maker of software that automates companies' technology operations had lost 5.58% over the past month. This has lagged the Computer and Technology sector's loss of 5.52% and the S&P 500's loss of 5.02% in that time.

NOW will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $1.04, up 5.05% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $1.11 billion, up 25.34% from the year-ago period.

NOW's full-year Zacks Consensus Estimates are calling for earnings of $4.45 per share and revenue of $4.41 billion. These results would represent year-over-year changes of +34.04% and +27.38%, respectively.

It is also important to note the recent changes to analyst estimates for NOW. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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 remained stagnant. NOW currently has a Zacks Rank of #3 (Hold).

Looking at its valuation, NOW is holding a Forward P/E ratio of 103.5. For comparison, its industry has an average Forward P/E of 27.04, which means NOW is trading at a premium to the group.

Investors should also note that NOW has a PEG ratio of 3.58 right now. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Computers - IT Services was holding an average PEG ratio of 2.32 at yesterday's closing price.

The Computers - IT Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 126, which puts it in the top 50% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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