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

ServiceNow (NOW) closed at $485 in the latest trading session, marking a -0.61% move from the prior day. This change lagged the S&P 500's 0.83% gain on the day. At the same time, the Dow added 1.2%, and the tech-heavy Nasdaq gained 0.74%.

Heading into today, shares of the maker of software that automates companies' technology operations had lost 1.85% over the past month, outpacing the Computer and Technology sector's loss of 5.53% and the S&P 500's loss of 4.83% in that time.

NOW will be looking to display strength as it nears its next earnings release. In that report, analysts expect NOW to post earnings of $1.04 per share. This would mark year-over-year growth of 5.05%. Meanwhile, our latest consensus estimate is calling for revenue of $1.11 billion, up 25.34% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $4.45 per share and revenue of $4.41 billion, which would represent changes of +34.04% and +27.38%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for NOW. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. NOW is currently a Zacks Rank #3 (Hold).

Digging into valuation, NOW currently has a Forward P/E ratio of 109.68. This valuation marks a premium compared to its industry's average Forward P/E of 26.07.

Also, we should mention that NOW has a PEG ratio of 3.79. 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 industry currently had an average PEG ratio of 2.45 as of yesterday's close.

The Computers - IT Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 111, putting it in the top 44% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

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