SERVICENOW INC (NOW) Stock Fundamental Analysis
NYSE:NOW - New York Stock Exchange, Inc. - US81762P1021 - Common Stock - Currency: USD
We assign a fundamental rating of 6 out of 10 to NOW. NOW was compared to 282 industry peers in the Software industry. NOW scores excellent on profitability, but there are some minor concerns on its financial health. NOW is valued quite expensive, but it does show an excellent growth. With these ratings, NOW could be worth investigating further 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 7.33%. This is amongst the best in the industry. NOW outperforms 80.14% of its industry peers.
NOW's Return On Equity of 15.17% is amongst the best of the industry. NOW outperforms 82.27% of its industry peers.
The Return On Invested Capital of NOW (9.56%) is better than 86.52% of its industry peers.
The Average Return On Invested Capital over the past 3 years for NOW is significantly below the industry average of 12.26%.
The 3 year average ROIC (6.51%) for NOW is below the current ROIC(9.56%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.33% | ||
| ROE | 15.17% | ||
| ROIC | 9.56% |
ROA(3y)6.46%
ROA(5y)4.58%
ROE(3y)14.66%
ROE(5y)10.88%
ROIC(3y)6.51%
ROIC(5y)5.28%
1.3 Margins
Looking at the Profit Margin, with a value of 13.41%, NOW is in the better half of the industry, outperforming 79.79% of the companies in the same industry.
NOW's Profit Margin has declined in the last couple of years.
NOW has a Operating Margin of 12.93%. This is amongst the best in the industry. NOW outperforms 80.14% of its industry peers.
In the last couple of years the Operating Margin of NOW has grown nicely.
NOW's Gross Margin of 78.92% is fine compared to the rest of the industry. NOW outperforms 77.66% 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 | 12.93% | ||
| PM (TTM) | 13.41% | ||
| GM | 78.92% |
OM growth 3Y41.76%
OM growth 5Y59.12%
PM growth 3Y49.27%
PM growth 5Y-6.45%
GM growth 3Y0.91%
GM growth 5Y0.57%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so NOW is destroying value.
NOW has more shares outstanding than it did 1 year ago.
NOW has more shares outstanding than it did 5 years ago.
NOW has a better debt/assets ratio than last year.
2.2 Solvency
NOW has an Altman-Z score of 13.08. This indicates that NOW is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of NOW (13.08) is better than 88.30% of its industry peers.
NOW has a debt to FCF ratio of 0.41. This is a very positive value and a sign of high solvency as it would only need 0.41 years to pay back of all of its debts.
The Debt to FCF ratio of NOW (0.41) is better than 79.43% of its industry peers.
NOW has a Debt/Equity ratio of 0.15. This is a healthy value indicating a solid balance between debt and equity.
With a Debt to Equity ratio value of 0.15, NOW perfoms like the industry average, outperforming 49.29% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.15 | ||
| Debt/FCF | 0.41 | ||
| Altman-Z | 13.08 |
ROIC/WACC0.87
WACC10.94%
2.3 Liquidity
NOW has a Current Ratio of 1.12. 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 Current ratio value of 1.12, NOW is not doing good in the industry: 68.79% of the companies in the same industry are doing better.
A Quick Ratio of 1.12 indicates that NOW should not have too much problems paying its short term obligations.
The Quick ratio of NOW (1.12) is worse than 68.44% of its industry peers.
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 | 1.12 | ||
| Quick Ratio | 1.12 |
3. Growth
3.1 Past
NOW shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 23.29%, which is quite impressive.
The Earnings Per Share has been growing by 33.14% 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 21.01%.
The Revenue has been growing by 25.99% on average over the past years. This is a very strong growth!
EPS 1Y (TTM)23.29%
EPS 3Y32.78%
EPS 5Y33.14%
EPS Q2Q%18.48%
Revenue 1Y (TTM)21.01%
Revenue growth 3Y23.05%
Revenue growth 5Y25.99%
Sales Q2Q%18.63%
3.2 Future
The Earnings Per Share is expected to grow by 19.14% on average over the next years. This is quite good.
NOW is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 18.04% yearly.
EPS Next Y20.05%
EPS Next 2Y19.97%
EPS Next 3Y20.13%
EPS Next 5Y19.14%
Revenue Next Year18.63%
Revenue Next 2Y18.99%
Revenue Next 3Y18.85%
Revenue Next 5Y18.04%
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.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 71.75, the valuation of NOW can be described as expensive.
NOW's Price/Earnings is on the same level as the industry average.
The average S&P500 Price/Earnings ratio is at 27.45. NOW is valued rather expensively when compared to this.
The Price/Forward Earnings ratio is 52.11, which means the current valuation is very expensive for NOW.
NOW's Price/Forward Earnings is on the same level as the industry average.
NOW's Price/Forward Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 21.90.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 71.75 | ||
| Fwd PE | 52.11 |
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.
The rest of the industry has a similar Price/Free Cash Flow ratio as NOW.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 59.6 | ||
| EV/EBITDA | 100.09 |
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.
NOW has an outstanding profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as NOW's earnings are expected to grow with 20.13% in the coming years.
PEG (NY)3.58
PEG (5Y)2.17
EPS Next 2Y19.97%
EPS Next 3Y20.13%
5. Dividend
5.1 Amount
NOW does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
1044.69
+34.93 (+3.46%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners91.37%
Inst Owner Change2.01%
Ins Owners0.13%
Ins Owner Change0.87%
Market Cap216.23B
Analysts83.2
Price Target1104.44 (5.72%)
Short Float %1.56%
Short Ratio2.18
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
Yearly DividendN/A
Dividend Growth(5Y)N/A
DPN/A
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)1.66%
Min EPS beat(2)-0.99%
Max EPS beat(2)4.31%
EPS beat(4)3
Avg EPS beat(4)4.75%
Min EPS beat(4)-0.99%
Max EPS beat(4)9.1%
EPS beat(8)7
Avg EPS beat(8)8.01%
EPS beat(12)11
Avg EPS beat(12)8.33%
EPS beat(16)15
Avg EPS beat(16)7.99%
Revenue beat(2)0
Avg Revenue beat(2)-0.99%
Min Revenue beat(2)-1.1%
Max Revenue beat(2)-0.87%
Revenue beat(4)1
Avg Revenue beat(4)-0.31%
Min Revenue beat(4)-1.1%
Max Revenue beat(4)0.97%
Revenue beat(8)3
Avg Revenue beat(8)-0.13%
Revenue beat(12)3
Avg Revenue beat(12)-0.45%
Revenue beat(16)6
Avg Revenue beat(16)-0.05%
PT rev (1m)2.38%
PT rev (3m)-5.57%
EPS NQ rev (1m)-0.29%
EPS NQ rev (3m)-2.11%
EPS NY rev (1m)-0.09%
EPS NY rev (3m)0.9%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.13%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-0.12%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 71.75 | ||
| Fwd PE | 52.11 | ||
| P/S | 18.85 | ||
| P/FCF | 59.6 | ||
| P/OCF | 46.98 | ||
| P/B | 21.33 | ||
| P/tB | 25.13 | ||
| EV/EBITDA | 100.09 |
EPS(TTM)14.56
EY1.39%
EPS(NY)20.05
Fwd EY1.92%
FCF(TTM)17.53
FCFY1.68%
OCF(TTM)22.24
OCFY2.13%
SpS55.41
BVpS48.99
TBVpS41.57
PEG (NY)3.58
PEG (5Y)2.17
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 7.33% | ||
| ROE | 15.17% | ||
| ROCE | 11.66% | ||
| ROIC | 9.56% | ||
| ROICexc | 19.88% | ||
| ROICexgc | 26.54% | ||
| OM | 12.93% | ||
| PM (TTM) | 13.41% | ||
| GM | 78.92% | ||
| FCFM | 31.63% |
ROA(3y)6.46%
ROA(5y)4.58%
ROE(3y)14.66%
ROE(5y)10.88%
ROIC(3y)6.51%
ROIC(5y)5.28%
ROICexc(3y)13.22%
ROICexc(5y)11.32%
ROICexgc(3y)18.4%
ROICexgc(5y)16.07%
ROCE(3y)7.94%
ROCE(5y)6.44%
ROICexcg growth 3Y18.02%
ROICexcg growth 5Y53.98%
ROICexc growth 3Y29.2%
ROICexc growth 5Y52.18%
OM growth 3Y41.76%
OM growth 5Y59.12%
PM growth 3Y49.27%
PM growth 5Y-6.45%
GM growth 3Y0.91%
GM growth 5Y0.57%
F-Score8
Asset Turnover0.55
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.15 | ||
| Debt/FCF | 0.41 | ||
| Debt/EBITDA | 0.72 | ||
| Cap/Depr | 164.14% | ||
| Cap/Sales | 8.5% | ||
| Interest Coverage | 64.48 | ||
| Cash Conversion | 221.62% | ||
| Profit Quality | 235.89% | ||
| Current Ratio | 1.12 | ||
| Quick Ratio | 1.12 | ||
| Altman-Z | 13.08 |
F-Score8
WACC10.94%
ROIC/WACC0.87
Cap/Depr(3y)136.22%
Cap/Depr(5y)124.36%
Cap/Sales(3y)7.82%
Cap/Sales(5y)7.96%
Profit Quality(3y)353.89%
Profit Quality(5y)596.69%
High Growth Momentum
Growth
EPS 1Y (TTM)23.29%
EPS 3Y32.78%
EPS 5Y33.14%
EPS Q2Q%18.48%
EPS Next Y20.05%
EPS Next 2Y19.97%
EPS Next 3Y20.13%
EPS Next 5Y19.14%
Revenue 1Y (TTM)21.01%
Revenue growth 3Y23.05%
Revenue growth 5Y25.99%
Sales Q2Q%18.63%
Revenue Next Year18.63%
Revenue Next 2Y18.99%
Revenue Next 3Y18.85%
Revenue Next 5Y18.04%
EBIT growth 1Y56.11%
EBIT growth 3Y74.43%
EBIT growth 5Y100.47%
EBIT Next Year44.62%
EBIT Next 3Y30%
EBIT Next 5Y24.59%
FCF growth 1Y69.53%
FCF growth 3Y23.49%
FCF growth 5Y30.31%
OCF growth 1Y66.65%
OCF growth 3Y24.88%
OCF growth 5Y28.12%