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 not overvalued while it is showing excellent growth. This is an interesting 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.
NOW had positive earnings in each of the past 5 years.
In the past 5 years NOW always reported a positive cash flow from operatings.

1.2 Ratios

Looking at the Return On Assets, with a value of 6.71%, NOW is in the better half of the industry, outperforming 75.90% of the companies in the same industry.
NOW has a Return On Equity of 13.48%. This is in the better half of the industry: NOW outperforms 78.78% of its industry peers.
The Return On Invested Capital of NOW (9.33%) is better than 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 10.76%.
The last Return On Invested Capital (9.33%) for NOW is above the 3 year average (8.15%), which is a sign of increasing profitability.

		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's Profit Margin of 13.16% is fine compared to the rest of the industry. NOW outperforms 74.82% of its industry peers.
NOW's Profit Margin has improved in the last couple of years.
The Operating Margin of NOW (13.76%) is better than 80.22% of its industry peers.
In the last couple of years the Operating Margin of NOW has grown nicely.
NOW has a Gross Margin of 77.56%. This is in the better half of the industry: NOW outperforms 74.10% of its industry peers.
NOW's Gross Margin has been stable in the last couple of years.

		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

NOW has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
NOW has about the same amout of shares outstanding than it did 1 year ago.
The number of shares outstanding for NOW has been increased compared to 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 Debt to FCF ratio of 0.33. This is in the better half of the industry: NOW outperforms 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 (0.12) which is comparable to the rest of the industry.

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

ROIC/WACC0.85

WACC11.04%

2.3 Liquidity

NOW has a Current 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.
NOW has a worse Current ratio (1.00) than 74.10% of its industry peers.
A Quick Ratio of 1.00 indicates that NOW should not have too much problems paying its short term obligations.
NOW's Quick ratio of 1.00 is on the low side compared to the rest of the industry. NOW is outperformed by 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.
Measured over the past years, NOW shows a very strong growth in Earnings Per Share. The EPS has been growing by 30.37% on average per year.
Looking at the last year, NOW shows a very strong growth in Revenue. The Revenue has grown by 20.88%.
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

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

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

Based on the Price/Earnings ratio of 33.62, the valuation of NOW can be described as expensive.
The rest of the industry has a similar Price/Earnings ratio as NOW.
The average S&P500 Price/Earnings ratio is at 28.41. NOW is around the same levels.
The Price/Forward Earnings ratio is 28.61, which means the current valuation is very expensive for NOW.
NOW's Price/Forward Earnings ratio is in line with the industry average.
The average S&P500 Price/Forward Earnings ratio is at 25.64. NOW is around the same levels.

		Industry Rank	Sector Rank
PE	33.62
Fwd PE	28.61

4.2 Price Multiples

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

		Industry Rank	Sector Rank
P/FCF	5.4
EV/EBITDA	6.6

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
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 97.87% in the coming years.