Why SERVICENOW INC (NYSE:NOW) Is a Standout High-Growth Stock in a Consolidation Phase.

Growth investors are on the lookout for stocks displaying robust revenue and EPS growth. In this analysis, we'll assess whether SERVICENOW INC (NYSE:NOW) aligns with growth investing criteria, especially as it consolidates and signals a possible breakout. As always, investors should conduct their own research, but SERVICENOW INC has surfaced on our radar for growth with base formation, warranting further examination.

What does the Growth looks like for NOW

ChartMill assigns a Growth Rating to every stock. This score ranges from 0 to 10 and evaluates the different growth aspects like EPS and Revenue, both in the past as in the future. NOW scores a 8 out of 10:

• The Earnings Per Share has grown by an impressive 29.34% over the past year.
• The Earnings Per Share has been growing by 33.14% on average over the past years. This is a very strong growth
• NOW shows a strong growth in Revenue. In the last year, the Revenue has grown by 22.44%.
• NOW shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 25.99% yearly.
• Based on estimates for the next years, NOW will show a quite strong growth in Earnings Per Share. The EPS will grow by 18.77% on average per year.
• NOW is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 19.47% yearly.

Assessing Health for NOW

ChartMill assigns a proprietary Health Rating to each stock. The score is computed by evaluating various liquidity and solvency ratios and ranges from 0 to 10. NOW was assigned a score of 6 for health:

• An Altman-Z score of 10.27 indicates that NOW is not in any danger for bankruptcy at the moment.
• NOW has a better Altman-Z score (10.27) than 87.28% of its industry peers.
• 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 has a Debt to FCF ratio of 0.44. This is in the better half of the industry: NOW outperforms 77.39% of its industry peers.
• A Debt/Equity ratio of 0.15 indicates that NOW is not too dependend on debt financing.
• NOW does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

Profitability Insights: NOW

ChartMill assigns a Profitability Rating to every stock. This score ranges from 0 to 10 and evaluates the different profitability ratios and margins, both absolutely, but also relative to the industry peers. NOW scores a 8 out of 10:

• NOW has a better Return On Assets (6.99%) than 80.92% of its industry peers.
• With an excellent Return On Equity value of 14.83%, NOW belongs to the best of the industry, outperforming 81.63% of the companies in the same industry.
• NOW has a better Return On Invested Capital (9.30%) than 84.45% of its industry peers.
• The last Return On Invested Capital (9.30%) for NOW is above the 3 year average (6.51%), which is a sign of increasing profitability.
• NOW's Profit Margin of 12.97% is fine compared to the rest of the industry. NOW outperforms 77.39% of its industry peers.
• With an excellent Operating Margin value of 12.42%, NOW belongs to the best of the industry, outperforming 80.92% of the companies in the same industry.
• NOW's Operating Margin has improved in the last couple of years.
• NOW has a better Gross Margin (79.18%) than 78.80% of its industry peers.

Looking at the Setup

ChartMill also assign a Setup Rating to every stock. This setup score also ranges from 0 to 10 and determines to which extend the stock is consolidating. This is achieved by evaluating multiple short term technical indicators. NOW currently has a 7 as setup rating:

Although the technical rating is bad, NOW does present a nice setup opportunity. Prices have been consolidating lately and the volatility has been reduced. There is a resistance zone just above the current price starting at 799.83. Right above this resistance zone may be a good entry point. There is a support zone below the current price at 730.87, a Stop Loss order could be placed below this zone.

More Strong Growth stocks can be found in our Strong Growth screener.

Our latest full fundamental report of NOW contains the most current fundamental analsysis.

Our latest full technical report of NOW contains the most current technical analsysis.

Disclaimer

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.