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 284 industry peers in the Software industry. While NOW belongs to the best of the industry regarding profitability, 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
In the past year NOW was profitable.
NOW had a positive operating cash flow in the past year.
In the past 5 years NOW has always been profitable.
Each year in the past 5 years NOW had a positive operating cash flow.
1.2 Ratios
NOW has a better Return On Assets (6.99%) than 81.52% of its industry peers.
Looking at the Return On Equity, with a value of 14.83%, NOW belongs to the top of the industry, outperforming 82.97% of the companies in the same industry.
The Return On Invested Capital of NOW (9.30%) is better than 85.14% of its industry peers.
The Average Return On Invested Capital over the past 3 years for NOW is significantly below the industry average of 11.91%.
The 3 year average ROIC (6.51%) for NOW is below the current ROIC(9.30%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.99% | ||
| ROE | 14.83% | ||
| ROIC | 9.3% |
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
With a decent Profit Margin value of 12.97%, NOW is doing good in the industry, outperforming 79.35% 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 12.42%. This is amongst the best in the industry. NOW outperforms 81.52% of its industry peers.
In the last couple of years the Operating Margin of NOW has grown nicely.
NOW has a Gross Margin of 79.18%. This is in the better half of the industry: NOW outperforms 77.54% of its industry peers.
NOW's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 12.42% | ||
| PM (TTM) | 12.97% | ||
| GM | 79.18% |
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%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so NOW is destroying value.
Compared to 1 year ago, NOW has more shares outstanding
NOW has more shares outstanding than it did 5 years ago.
Compared to 1 year ago, NOW has an improved debt to assets ratio.
2.2 Solvency
NOW has an Altman-Z score of 12.15. This indicates that NOW is financially healthy and has little risk of bankruptcy at the moment.
NOW has a better Altman-Z score (12.15) than 85.14% of its industry peers.
The Debt to FCF ratio of NOW is 0.44, which is an excellent value as it means it would take NOW, only 0.44 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of NOW (0.44) is better than 76.09% of its industry peers.
A Debt/Equity ratio of 0.15 indicates that NOW is not too dependend on debt financing.
The Debt to Equity ratio of NOW (0.15) is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.15 | ||
| Debt/FCF | 0.44 | ||
| Altman-Z | 12.15 |
ROIC/WACC0.66
WACC14.03%
2.3 Liquidity
A Current Ratio of 1.10 indicates that NOW should not have too much problems paying its short term obligations.
The Current ratio of NOW (1.10) is worse than 72.10% of its industry peers.
NOW has a Quick Ratio of 1.10. 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 1.10, NOW is not doing good in the industry: 71.01% 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 | 1.1 | ||
| Quick Ratio | 1.1 |
3. Growth
3.1 Past
NOW shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 29.34%, 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
The Revenue has grown by 22.44% in the past year. This is a very strong growth!
NOW shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 25.99% yearly.
EPS 1Y (TTM)29.34%
EPS 3Y32.78%
EPS 5Y33.14%
EPS Q2Q%18.01%
Revenue 1Y (TTM)22.44%
Revenue growth 3Y23.05%
Revenue growth 5Y25.99%
Sales Q2Q%21.34%
3.2 Future
Based on estimates for the next years, NOW will show a very strong growth in Earnings Per Share. The EPS will grow by 20.23% on average per year.
Based on estimates for the next years, NOW will show a quite strong growth in Revenue. The Revenue will grow by 18.58% on average per year.
EPS Next Y19.09%
EPS Next 2Y20.08%
EPS Next 3Y20.8%
EPS Next 5Y20.23%
Revenue Next Year18.91%
Revenue Next 2Y19.25%
Revenue Next 3Y19.17%
Revenue Next 5Y18.58%
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
The Price/Earnings ratio is 67.37, which means the current valuation is very expensive for NOW.
NOW's Price/Earnings ratio is in line with the industry average.
NOW's Price/Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 29.63.
With a Price/Forward Earnings ratio of 56.57, 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 (22.68), we can say NOW is valued expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 67.37 | ||
| Fwd PE | 56.57 |
4.2 Price Multiples
NOW's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. NOW is cheaper than 60.14% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of NOW is on the same level as its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 57.28 | ||
| EV/EBITDA | 99.42 |
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 20.80% in the coming years. This may justify a more expensive valuation.
PEG (NY)3.53
PEG (5Y)2.03
EPS Next 2Y20.08%
EPS Next 3Y20.8%
5. Dividend
5.1 Amount
NOW does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
938.41
-29.57 (-3.05%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners90.66%
Inst Owner Change-2.18%
Ins Owners0.18%
Ins Owner Change-2.08%
Market Cap193.31B
Analysts81.63
Price Target1166.08 (24.26%)
Short Float %1.57%
Short Ratio2.22
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)2.79%
Min EPS beat(2)-0.99%
Max EPS beat(2)6.57%
EPS beat(4)3
Avg EPS beat(4)5.56%
Min EPS beat(4)-0.99%
Max EPS beat(4)9.1%
EPS beat(8)7
Avg EPS beat(8)9.33%
EPS beat(12)11
Avg EPS beat(12)8.03%
EPS beat(16)15
Avg EPS beat(16)8.47%
Revenue beat(2)1
Avg Revenue beat(2)-0.06%
Min Revenue beat(2)-1.1%
Max Revenue beat(2)0.97%
Revenue beat(4)1
Avg Revenue beat(4)-0.17%
Min Revenue beat(4)-1.1%
Max Revenue beat(4)0.97%
Revenue beat(8)3
Avg Revenue beat(8)-0.07%
Revenue beat(12)4
Avg Revenue beat(12)-0.34%
Revenue beat(16)7
Avg Revenue beat(16)0.06%
PT rev (1m)6.59%
PT rev (3m)22.52%
EPS NQ rev (1m)-1.99%
EPS NQ rev (3m)-1.32%
EPS NY rev (1m)-1.59%
EPS NY rev (3m)-1.64%
Revenue NQ rev (1m)-1.11%
Revenue NQ rev (3m)-1.02%
Revenue NY rev (1m)-1.35%
Revenue NY rev (3m)-1.35%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 67.37 | ||
| Fwd PE | 56.57 | ||
| P/S | 17.6 | ||
| P/FCF | 57.28 | ||
| P/OCF | 45.3 | ||
| P/B | 20.12 | ||
| P/tB | 23.79 | ||
| EV/EBITDA | 99.42 |
EPS(TTM)13.93
EY1.48%
EPS(NY)16.59
Fwd EY1.77%
FCF(TTM)16.38
FCFY1.75%
OCF(TTM)20.71
OCFY2.21%
SpS53.32
BVpS46.65
TBVpS39.45
PEG (NY)3.53
PEG (5Y)2.03
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 6.99% | ||
| ROE | 14.83% | ||
| ROCE | 11.34% | ||
| ROIC | 9.3% | ||
| ROICexc | 17.86% | ||
| ROICexgc | 23.39% | ||
| OM | 12.42% | ||
| PM (TTM) | 12.97% | ||
| GM | 79.18% | ||
| FCFM | 30.73% |
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 Turnover0.54
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.15 | ||
| Debt/FCF | 0.44 | ||
| Debt/EBITDA | 0.77 | ||
| Cap/Depr | 158.16% | ||
| Cap/Sales | 8.12% | ||
| Interest Coverage | 59.3 | ||
| Cash Conversion | 221.32% | ||
| Profit Quality | 236.84% | ||
| Current Ratio | 1.1 | ||
| Quick Ratio | 1.1 | ||
| Altman-Z | 12.15 |
F-Score8
WACC14.03%
ROIC/WACC0.66
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)29.34%
EPS 3Y32.78%
EPS 5Y33.14%
EPS Q2Q%18.01%
EPS Next Y19.09%
EPS Next 2Y20.08%
EPS Next 3Y20.8%
EPS Next 5Y20.23%
Revenue 1Y (TTM)22.44%
Revenue growth 3Y23.05%
Revenue growth 5Y25.99%
Sales Q2Q%21.34%
Revenue Next Year18.91%
Revenue Next 2Y19.25%
Revenue Next 3Y19.17%
Revenue Next 5Y18.58%
EBIT growth 1Y79%
EBIT growth 3Y74.43%
EBIT growth 5Y100.47%
EBIT Next Year46.11%
EBIT Next 3Y30.61%
EBIT Next 5Y27.19%
FCF growth 1Y24.82%
FCF growth 3Y23.49%
FCF growth 5Y30.31%
OCF growth 1Y25.57%
OCF growth 3Y24.88%
OCF growth 5Y28.12%