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 283 industry peers in the Software industry. NOW scores excellent on profitability, but there are some minor concerns on its financial health. NOW shows excellent growth, but is valued quite expensive already. These ratings would make NOW suitable 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.
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's Return On Assets of 7.33% is amongst the best of the industry. NOW outperforms 80.21% of its industry peers.
NOW has a Return On Equity of 15.17%. This is amongst the best in the industry. NOW outperforms 81.98% of its industry peers.
With an excellent Return On Invested Capital value of 9.56%, NOW belongs to the best of the industry, outperforming 85.87% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for NOW is significantly below the industry average of 12.70%.
The last Return On Invested Capital (9.56%) for NOW is above the 3 year average (6.51%), which is a sign of increasing profitability.
| 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
NOW has a better Profit Margin (13.41%) than 78.80% of its industry peers.
In the last couple of years the Profit Margin of NOW has declined.
NOW's Operating Margin of 12.93% is amongst the best of the industry. NOW outperforms 80.21% of its industry peers.
In the last couple of years the Operating Margin of NOW has grown nicely.
Looking at the Gross Margin, with a value of 78.92%, NOW is in the better half of the industry, outperforming 77.39% of the companies in the same industry.
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
NOW has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it 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.
The debt/assets ratio for NOW has been reduced compared to a year ago.
2.2 Solvency
NOW has an Altman-Z score of 12.75. This indicates that NOW is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 12.75, NOW belongs to the top of the industry, outperforming 89.05% of the companies in the same industry.
The Debt to FCF ratio of NOW is 0.41, which is an excellent value as it means it would take NOW, only 0.41 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 0.41, NOW is in the better half of the industry, outperforming 79.15% of the companies in the same industry.
A Debt/Equity ratio of 0.15 indicates that NOW is not too dependend on debt financing.
NOW has a Debt to Equity ratio (0.15) which is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.15 | ||
| Debt/FCF | 0.41 | ||
| Altman-Z | 12.75 |
ROIC/WACC0.87
WACC11.02%
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 worse Current ratio (1.12) than 68.55% of its industry peers.
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 68.20% 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
The Revenue has grown by 21.01% in the past year. This is a very strong growth!
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 18.77% on average over the next years. This is quite good.
The Revenue is expected to grow by 19.47% on average over the next years. This is quite good.
EPS Next Y20.16%
EPS Next 2Y20.07%
EPS Next 3Y20.36%
EPS Next 5Y18.77%
Revenue Next Year18.63%
Revenue Next 2Y19.02%
Revenue Next 3Y18.92%
Revenue Next 5Y19.47%
3.3 Evolution
Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of 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 68.98, which means the current valuation is very expensive for NOW.
NOW's Price/Earnings is on the same level as the industry average.
When comparing the Price/Earnings ratio of NOW to the average of the S&P500 Index (25.82), we can say NOW is valued expensively.
The Price/Forward Earnings ratio is 50.01, 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 21.76. NOW is valued rather expensively when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 68.98 | ||
| Fwd PE | 50.01 |
4.2 Price Multiples
NOW's Enterprise Value to EBITDA ratio is in line with the industry average.
NOW's Price/Free Cash Flow ratio is in line with the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 57.31 | ||
| EV/EBITDA | 97.22 |
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.
A more expensive valuation may be justified as NOW's earnings are expected to grow with 20.36% in the coming years.
PEG (NY)3.42
PEG (5Y)2.08
EPS Next 2Y20.07%
EPS Next 3Y20.36%
5. Dividend
5.1 Amount
No dividends for NOW!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
1004.37
-11.4 (-1.12%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners92.16%
Inst Owner Change1.96%
Ins Owners0.17%
Ins Owner Change-0.71%
Market Cap207.90B
Analysts82.35
Price Target1078.75 (7.41%)
Short Float %2.1%
Short Ratio2.07
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)-7.06%
PT rev (3m)-7.49%
EPS NQ rev (1m)-1.44%
EPS NQ rev (3m)-2.72%
EPS NY rev (1m)1.21%
EPS NY rev (3m)0.9%
Revenue NQ rev (1m)0.22%
Revenue NQ rev (3m)0.13%
Revenue NY rev (1m)-0.01%
Revenue NY rev (3m)-0.24%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 68.98 | ||
| Fwd PE | 50.01 | ||
| P/S | 18.13 | ||
| P/FCF | 57.31 | ||
| P/OCF | 45.17 | ||
| P/B | 20.51 | ||
| P/tB | 24.16 | ||
| EV/EBITDA | 97.22 |
EPS(TTM)14.56
EY1.45%
EPS(NY)20.08
Fwd EY2%
FCF(TTM)17.53
FCFY1.75%
OCF(TTM)22.24
OCFY2.21%
SpS55.41
BVpS48.98
TBVpS41.57
PEG (NY)3.42
PEG (5Y)2.08
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 | 12.75 |
F-Score8
WACC11.02%
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 Y20.16%
EPS Next 2Y20.07%
EPS Next 3Y20.36%
EPS Next 5Y18.77%
Revenue 1Y (TTM)21.01%
Revenue growth 3Y23.05%
Revenue growth 5Y25.99%
Sales Q2Q%18.63%
Revenue Next Year18.63%
Revenue Next 2Y19.02%
Revenue Next 3Y18.92%
Revenue Next 5Y19.47%
EBIT growth 1Y56.11%
EBIT growth 3Y74.43%
EBIT growth 5Y100.47%
EBIT Next Year46.45%
EBIT Next 3Y30.44%
EBIT Next 5Y26.41%
FCF growth 1Y69.53%
FCF growth 3Y23.49%
FCF growth 5Y30.31%
OCF growth 1Y66.65%
OCF growth 3Y24.88%
OCF growth 5Y28.12%