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ServiceNow (NOW) Gains But Lags Market: What You Should Know

ServiceNow (NOW) closed the most recent trading day at $552.70, moving +0.77% from the previous trading session. This move lagged the S&P 500's daily gain of 1.09%.

Heading into today, shares of the maker of software that automates companies' technology operations had gained 16.16% over the past month, outpacing the Computer and Technology sector's gain of 6.99% and the S&P 500's gain of 5.05% in that time.

NOW will be looking to display strength as it nears its next earnings release, which is expected to be April 28, 2021. The company is expected to report EPS of $1.34, up 27.62% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.33 billion, up 27.41% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $5.47 per share and revenue of $5.73 billion. These totals would mark changes of +18.14% and +26.8%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for NOW. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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. Within the past 30 days, our consensus EPS projection remained stagnant. NOW is holding a Zacks Rank of #3 (Hold) right now.

Valuation is also important, so investors should note that NOW has a Forward P/E ratio of 100.3 right now. Its industry sports an average Forward P/E of 30.05, so we one might conclude that NOW is trading at a premium comparatively.

Meanwhile, NOW's PEG ratio is currently 3.61. 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. NOW's industry had an average PEG ratio of 2 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 161, putting it in the bottom 37% 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.

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


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