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ServiceNow (NOW) Outperforms Broader Market: What You Need to Know

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ServiceNow (NOW - Free Report) ended the recent trading session at $709.15, demonstrating a +1.48% swing from the preceding day's closing price. The stock exceeded the S&P 500, which registered a gain of 0.26% for the day. Elsewhere, the Dow saw an upswing of 0.18%, while the tech-heavy Nasdaq appreciated by 0.35%.

Shares of the maker of software that automates companies' technology operations have depreciated by 4.25% over the course of the past month, underperforming the Computer and Technology sector's gain of 6.38% and the S&P 500's gain of 3.25%.

Analysts and investors alike will be keeping a close eye on the performance of ServiceNow in its upcoming earnings disclosure. It is anticipated that the company will report an EPS of $2.85, marking a 20.25% rise compared to the same quarter of the previous year. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $2.61 billion, up 21.22% from the year-ago period.

NOW's full-year Zacks Consensus Estimates are calling for earnings of $13.51 per share and revenue of $10.88 billion. These results would represent year-over-year changes of +25.32% and +21.31%, respectively.

Investors should also note any recent changes to analyst estimates for ServiceNow. Such recent modifications usually signify the changing landscape of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. At present, ServiceNow boasts a Zacks Rank of #3 (Hold).

From a valuation perspective, ServiceNow is currently exchanging hands at a Forward P/E ratio of 51.72. This signifies a premium in comparison to the average Forward P/E of 26.34 for its industry.

Also, we should mention that NOW has a PEG ratio of 2.11. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The average PEG ratio for the Computers - IT Services industry stood at 2.92 at the close of the market yesterday.

The Computers - IT Services industry is part of the Computer and Technology sector. At present, this industry carries a Zacks Industry Rank of 145, placing it within the bottom 43% of over 250 industries.

The Zacks Industry Rank gauges the strength of our 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.

Be sure to use Zacks.com to monitor all these stock-influencing metrics, and more, throughout the forthcoming trading sessions.


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