NOW gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 278 industry peers in the Software industry. NOW scores excellent on profitability, but there are some minor concerns on its financial health. NOW is growing strongly while it is still valued neutral. This is a good combination!

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year NOW was profitable.
NOW had a positive operating cash flow in the past year.
Each year in the past 5 years NOW has been profitable.
In the past 5 years NOW always reported a positive cash flow from operatings.

1.2 Ratios

NOW has a Return On Assets of 6.71%. This is in the better half of the industry: NOW outperforms 75.90% of its industry peers.
Looking at the Return On Equity, with a value of 13.48%, NOW is in the better half of the industry, outperforming 78.78% of the companies in the same industry.
NOW's Return On Invested Capital of 9.33% is amongst the best of the industry. NOW outperforms 82.73% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for NOW is below the industry average of 10.73%.
The 3 year average ROIC (8.15%) for NOW is below the current ROIC(9.33%), indicating increased profibility in the last year.

		Industry Rank	Sector Rank
ROA	6.71%
ROE	13.48%
ROIC	9.33%

ROA(3y)7.89%

ROA(5y)5.65%

ROE(3y)17%

ROE(5y)12.74%

ROIC(3y)8.15%

ROIC(5y)6.36%

1.3 Margins

NOW has a Profit Margin of 13.16%. This is in the better half of the industry: NOW outperforms 74.82% of its industry peers.
NOW's Profit Margin has improved in the last couple of years.
NOW has a better Operating Margin (13.76%) than 80.22% of its industry peers.
NOW's Operating Margin has improved in the last couple of years.
NOW has a better Gross Margin (77.56%) than 74.10% of its industry peers.
In the last couple of years the Gross Margin of NOW has remained more or less at the same level.

		Industry Rank	Sector Rank
OM	13.76%
PM (TTM)	13.16%
GM	77.56%

OM growth 3Y41.21%

OM growth 5Y25.68%

PM growth 3Y43.17%

PM growth 5Y38.09%

GM growth 3Y-0.3%

GM growth 5Y-0.14%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), NOW is destroying value.
The number of shares outstanding for NOW remains at a similar level compared to 1 year ago.
NOW has more shares outstanding than it did 5 years ago.
The debt/assets ratio for NOW has been reduced compared to a year ago.

2.2 Solvency

NOW has a debt to FCF ratio of 0.33. This is a very positive value and a sign of high solvency as it would only need 0.33 years to pay back of all of its debts.
NOW has a better Debt to FCF ratio (0.33) than 79.50% of its industry peers.
A Debt/Equity ratio of 0.12 indicates that NOW is not too dependend on debt financing.
NOW has a Debt to Equity ratio of 0.12. This is comparable to the rest of the industry: NOW outperforms 51.44% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	0.12
Debt/FCF	0.33
Altman-Z	N/A

ROIC/WACC0.85

WACC11.04%

2.3 Liquidity

A Current Ratio of 1.00 indicates that NOW should not have too much problems paying its short term obligations.
NOW has a worse Current ratio (1.00) than 74.10% of its industry peers.
NOW has a Quick Ratio of 1.00. This is a normal value and indicates that NOW is financially healthy and should not expect problems in meeting its short term obligations.
The Quick ratio of NOW (1.00) is worse than 72.66% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	1
Quick Ratio	1

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

NOW shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 25.99%, which is quite impressive.
The Earnings Per Share has been growing by 30.37% on average over the past years. This is a very strong growth
The Revenue has grown by 20.88% in the past year. This is a very strong growth!
The Revenue has been growing by 24.05% on average over the past years. This is a very strong growth!

EPS 1Y (TTM)25.99%

EPS 3Y32.23%

EPS 5Y30.37%

EPS Q2Q%25.34%

Revenue 1Y (TTM)20.88%

Revenue growth 3Y22.38%

Revenue growth 5Y24.05%

Sales Q2Q%20.66%

3.2 Future

NOW is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 16.42% yearly.
Based on estimates for the next years, NOW will show a quite strong growth in Revenue. The Revenue will grow by 17.38% on average per year.

EPS Next Y17.51%

EPS Next 2Y18.71%

EPS Next 3Y97.87%

EPS Next 5Y16.42%

Revenue Next Year18.62%

Revenue Next 2Y18.61%

Revenue Next 3Y17.5%

Revenue Next 5Y17.38%

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.
Although the future Revenue growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.

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4. Valuation

4.1 Price/Earnings Ratio

With a Price/Earnings ratio of 33.34, NOW can be considered very expensive at the moment.
NOW's Price/Earnings ratio is in line with the industry average.
NOW is valuated at similar levels of the S&P average when we compare the Price/Earnings ratio to 28.32, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 28.37, which means the current valuation is very expensive for NOW.
NOW's Price/Forward Earnings ratio is in line with the industry average.
NOW is valuated at similar levels of the S&P average when we compare the Price/Forward Earnings ratio to 25.57, which is the current average of the S&P500 Index.

		Industry Rank	Sector Rank
PE	33.34
Fwd PE	28.37

4.2 Price Multiples

92.45% of the companies in the same industry are more expensive than NOW, based on the Enterprise Value to EBITDA ratio.
Based on the Price/Free Cash Flow ratio, NOW is valued cheaply inside the industry as 97.48% of the companies are valued more expensively.

		Industry Rank	Sector Rank
P/FCF	5.36
EV/EBITDA	6.6

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates NOW does not grow enough to justify the current Price/Earnings ratio.
The excellent profitability rating of NOW may justify a higher PE ratio.
A more expensive valuation may be justified as NOW's earnings are expected to grow with 97.87% in the coming years.