In the latest trading session, ServiceNow (NOW) closed at $535.34, marking a +1.33% move from the previous day. This change outpaced the S&P 500's 0.62% gain on the day. At the same time, the Dow added 0.5%, and the tech-heavy Nasdaq lost 5.66%.
Prior to today's trading, shares of the maker of software that automates companies' technology operations had gained 16.33% over the past month. This has outpaced the Computer and Technology sector's gain of 9.07% and the S&P 500's gain of 3.44% in that time.
Investors will be hoping for strength from ServiceNow as it approaches its next earnings release. The company is expected to report EPS of $2.05, up 26.54% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $2.13 billion, up 21.52% from the prior-year quarter.
Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $9.59 per share and revenue of $8.81 billion. These totals would mark changes of +26.35% and +21.63%, respectively, from last year.
It is also important to note the recent changes to analyst estimates for ServiceNow. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.
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. The Zacks Consensus EPS estimate has moved 3.02% higher within the past month. ServiceNow is currently sporting a Zacks Rank of #1 (Strong Buy).
Valuation is also important, so investors should note that ServiceNow has a Forward P/E ratio of 55.12 right now. This represents a premium compared to its industry's average Forward P/E of 19.27.
We can also see that NOW currently has a PEG ratio of 2.19. 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 2.06 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 85, putting it in the top 34% 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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