SERVICENOW INC (NOW) Stock Fundamental Analysis
NYSE:NOW - New York Stock Exchange, Inc. - US81762P1021 - Common Stock - Currency: USD
NOW gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 284 industry peers in the Software industry. NOW has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. NOW is valued quite expensive, but it does show an excellent growth. These ratings would make NOW suitable for growth and quality investing!
1. Profitability
1.1 Basic Checks
In the past year NOW was profitable.
In the past year NOW had a positive cash flow from operations.
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
NOW has a better Return On Assets (7.33%) than 80.28% of its industry peers.
With an excellent Return On Equity value of 15.17%, NOW belongs to the best of the industry, outperforming 82.39% of the companies in the same industry.
With an excellent Return On Invested Capital value of 9.56%, NOW belongs to the best of the industry, outperforming 86.62% of the companies in the same industry.
NOW had an Average Return On Invested Capital over the past 3 years of 6.51%. This is significantly below the industry average of 12.30%.
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
With a decent Profit Margin value of 13.41%, NOW is doing good in the industry, outperforming 79.93% of the companies in the same industry.
In the last couple of years the Profit Margin of NOW has declined.
Looking at the Operating Margin, with a value of 12.93%, NOW belongs to the top of the industry, outperforming 80.28% of the companies in the same industry.
In the last couple of years the Operating Margin of NOW has grown nicely.
The Gross Margin of NOW (78.92%) is better than 77.82% of its industry peers.
NOW's Gross Margin has been stable in the last couple of years.
| 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 just above the Cost of Capital (WACC), so NOW is still creating some value.
The number of shares outstanding for NOW has been increased compared to 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
An Altman-Z score of 12.65 indicates that NOW is not in any danger for bankruptcy at the moment.
NOW's Altman-Z score of 12.65 is amongst the best of the industry. NOW outperforms 89.08% 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.
NOW's Debt to FCF ratio of 0.41 is fine compared to the rest of the industry. NOW outperforms 79.58% of its industry peers.
A Debt/Equity ratio of 0.15 indicates that NOW is not too dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.15, NOW is in line with its industry, outperforming 50.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.15 | ||
| Debt/FCF | 0.41 | ||
| Altman-Z | 12.65 |
ROIC/WACC1.06
WACC8.99%
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.
NOW has a Current ratio of 1.12. This is in the lower half of the industry: NOW underperforms 68.66% of its industry peers.
NOW has a Quick 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.
NOW has a worse Quick ratio (1.12) than 68.31% 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
The Earnings Per Share has grown by an impressive 23.29% 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
Looking at the last year, NOW shows a very strong growth in Revenue. The Revenue has grown by 21.01%.
Measured over the past years, NOW shows a very strong growth in Revenue. The Revenue has been growing by 25.99% on average per year.
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.
Based on estimates for the next years, NOW will show a quite strong growth in Revenue. The Revenue will grow by 18.04% on average per year.
EPS Next Y20.16%
EPS Next 2Y20.07%
EPS Next 3Y20.36%
EPS Next 5Y19.14%
Revenue Next Year18.63%
Revenue Next 2Y18.98%
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.
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
Based on the Price/Earnings ratio of 67.90, 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 26.31. NOW is valued rather expensively when compared to this.
A Price/Forward Earnings ratio of 49.23 indicates a quite expensive valuation of NOW.
The rest of the industry has a similar Price/Forward Earnings ratio as NOW.
NOW is valuated expensively when we compare the Price/Forward Earnings ratio to 22.13, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 67.9 | ||
| Fwd PE | 49.23 |
4.2 Price Multiples
NOW's Enterprise Value to EBITDA is on the same level as the industry average.
NOW's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 56.4 | ||
| EV/EBITDA | 96.37 |
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.
NOW's earnings are expected to grow with 20.36% in the coming years. This may justify a more expensive valuation.
PEG (NY)3.37
PEG (5Y)2.05
EPS Next 2Y20.07%
EPS Next 3Y20.36%
5. Dividend
5.1 Amount
NOW does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
988.66
-18.71 (-1.86%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners92.16%
Inst Owner Change2.01%
Ins Owners0.17%
Ins Owner Change0.87%
Market Cap204.63B
Analysts83.2
Price Target1101.39 (11.4%)
Short Float %2.06%
Short Ratio2.32
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)5.48%
PT rev (3m)-7.85%
EPS NQ rev (1m)-0.3%
EPS NQ rev (3m)-3%
EPS NY rev (1m)1.21%
EPS NY rev (3m)0.9%
Revenue NQ rev (1m)-0.03%
Revenue NQ rev (3m)0.13%
Revenue NY rev (1m)0.01%
Revenue NY rev (3m)-0.12%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 67.9 | ||
| Fwd PE | 49.23 | ||
| P/S | 17.84 | ||
| P/FCF | 56.4 | ||
| P/OCF | 44.46 | ||
| P/B | 20.18 | ||
| P/tB | 23.78 | ||
| EV/EBITDA | 96.37 |
EPS(TTM)14.56
EY1.47%
EPS(NY)20.08
Fwd EY2.03%
FCF(TTM)17.53
FCFY1.77%
OCF(TTM)22.24
OCFY2.25%
SpS55.41
BVpS48.99
TBVpS41.57
PEG (NY)3.37
PEG (5Y)2.05
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 | 12.65 |
F-Score8
WACC8.99%
ROIC/WACC1.06
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 Y20.16%
EPS Next 2Y20.07%
EPS Next 3Y20.36%
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 2Y18.98%
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%