SERVICENOW INC (NOW)
US81762P1021 - Common Stock
We assign a fundamental rating of 6 out of 10 to NOW. NOW was compared to 279 industry peers in the Software industry. NOW has an excellent profitability rating, but there are some minor concerns on its financial health. NOW shows excellent growth, but is valued quite expensive already. This makes NOW very considerable for growth investing!
1. Profitability
1.1 Basic Checks
NOW had positive earnings in the past year.
NOW had a positive operating cash flow in the past year.
Each year in the past 5 years NOW has been profitable.
NOW had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
NOW has a Return On Assets of 7.25%. This is amongst the best in the industry. NOW outperforms 81.36% of its industry peers.
NOW has a Return On Equity of 14.38%. This is amongst the best in the industry. NOW outperforms 84.23% of its industry peers.
Looking at the Return On Invested Capital, with a value of 8.81%, NOW belongs to the top of the industry, outperforming 84.95% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for NOW is significantly below the industry average of 11.44%.
The last Return On Invested Capital (8.81%) for NOW is above the 3 year average (4.58%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.25% | ||
| ROE | 14.38% | ||
| ROIC | 8.81% |
ROA(3y)4.84%
ROA(5y)5.26%
ROE(3y)11.79%
ROE(5y)13.8%
ROIC(3y)4.58%
ROIC(5y)3.61%
1.3 Margins
With an excellent Profit Margin value of 12.77%, NOW belongs to the best of the industry, outperforming 80.65% of the companies in the same industry.
NOW's Profit Margin has improved in the last couple of years.
NOW has a better Operating Margin (12.04%) than 81.36% of its industry peers.
NOW's Operating Margin has improved in the last couple of years.
The Gross Margin of NOW (79.24%) is better than 77.78% of its industry peers.
NOW's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 12.04% | ||
| PM (TTM) | 12.77% | ||
| GM | 79.24% |
OM growth 3Y24.53%
OM growth 5YN/A
PM growth 3Y94.51%
PM growth 5YN/A
GM growth 3Y0.18%
GM growth 5Y0.64%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), NOW is destroying value.
Compared to 1 year ago, NOW has more shares outstanding
The number of shares outstanding for NOW has been increased compared to 5 years ago.
Compared to 1 year ago, NOW has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 14.92 indicates that NOW is not in any danger for bankruptcy at the moment.
With an excellent Altman-Z score value of 14.92, NOW belongs to the best of the industry, outperforming 89.96% of the companies in the same industry.
NOW has a debt to FCF ratio of 0.44. This is a very positive value and a sign of high solvency as it would only need 0.44 years to pay back of all of its debts.
NOW's Debt to FCF ratio of 0.44 is fine compared to the rest of the industry. NOW outperforms 78.49% of its industry peers.
A Debt/Equity ratio of 0.16 indicates that NOW is not too dependend on debt financing.
NOW's Debt to Equity ratio of 0.16 is in line compared to the rest of the industry. NOW outperforms 44.44% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.16 | ||
| Debt/FCF | 0.44 | ||
| Altman-Z | 14.92 |
ROIC/WACC0.74
WACC11.83%
2.3 Liquidity
A Current Ratio of 1.13 indicates that NOW should not have too much problems paying its short term obligations.
With a Current ratio value of 1.13, NOW is not doing good in the industry: 69.53% of the companies in the same industry are doing better.
NOW has a Quick Ratio of 1.13. This is a normal value and indicates that NOW is financially healthy and should not expect problems in meeting its short term obligations.
With a Quick ratio value of 1.13, NOW is not doing good in the industry: 68.46% of the companies in the same industry are doing better.
The current and quick ratio evaluation for NOW is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.13 | ||
| Quick Ratio | 1.13 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 34.51% over the past year.
The Earnings Per Share has been growing by 33.92% on average over the past years. This is a very strong growth
Looking at the last year, NOW shows a very strong growth in Revenue. The Revenue has grown by 23.48%.
The Revenue has been growing by 28.02% on average over the past years. This is a very strong growth!
EPS 1Y (TTM)34.51%
EPS 3Y32.21%
EPS 5Y33.92%
EPS Q2Q%27.4%
Revenue 1Y (TTM)23.48%
Revenue growth 3Y25.68%
Revenue growth 5Y28.02%
Sales Q2Q%22.25%
3.2 Future
The Earnings Per Share is expected to grow by 21.63% on average over the next years. This is a very strong growth
Based on estimates for the next years, NOW will show a quite strong growth in Revenue. The Revenue will grow by 19.57% on average per year.
EPS Next Y30.55%
EPS Next 2Y25.14%
EPS Next 3Y24.09%
EPS Next 5Y21.63%
Revenue Next Year22.96%
Revenue Next 2Y21.73%
Revenue Next 3Y21.24%
Revenue Next 5Y19.57%
3.3 Evolution
The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
The estimated forward Revenue growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 76.51 indicates a quite expensive valuation of NOW.
Compared to the rest of the industry, the Price/Earnings ratio of NOW is on the same level as its industry peers.
NOW is valuated expensively when we compare the Price/Earnings ratio to 28.68, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 60.65, NOW can be considered very expensive at the moment.
The rest of the industry has a similar Price/Forward Earnings ratio as NOW.
When comparing the Price/Forward Earnings ratio of NOW to the average of the S&P500 Index (23.58), we can say NOW is valued expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 76.51 | ||
| Fwd PE | 60.65 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of NOW is on the same level as its industry peers.
NOW's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 62.96 | ||
| EV/EBITDA | 111.58 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The excellent profitability rating of NOW may justify a higher PE ratio.
NOW's earnings are expected to grow with 24.09% in the coming years. This may justify a more expensive valuation.
PEG (NY)2.5
PEG (5Y)2.26
EPS Next 2Y25.14%
EPS Next 3Y24.09%
5. Dividend
5.1 Amount
No dividends for NOW!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
SERVICENOW INC
NYSE:NOW (11/20/2024, 8:04:01 PM)
After market: 1024.69 +1.71 (+0.17%)1022.98
+0.88 (+0.09%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap210.73B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
Dividend Growth(5Y)
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Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 76.51 | ||
| Fwd PE | 60.65 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)2.5
PEG (5Y)2.26
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.25% | ||
| ROE | 14.38% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 12.04% | ||
| PM (TTM) | 12.77% | ||
| GM | 79.24% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.57
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.16 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.13 | ||
| Quick Ratio | 1.13 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
High Growth Momentum
Growth
EPS 1Y (TTM)34.51%
EPS 3Y32.21%
EPS 5Y
EPS Q2Q%
EPS Next Y30.55%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)23.48%
Revenue growth 3Y25.68%
Revenue growth 5Y
Sales Q2Q%
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
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