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 281 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 expensively, but it does show have an excellent growth rating. This makes NOW very considerable for growth 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.
Each year in the past 5 years NOW had a positive operating cash flow.
1.2 Ratios
With an excellent Return On Assets value of 7.33%, NOW belongs to the best of the industry, outperforming 81.14% of the companies in the same industry.
The Return On Equity of NOW (15.17%) is better than 81.49% of its industry peers.
The Return On Invested Capital of NOW (9.56%) is better than 85.77% of its industry peers.
NOW had an Average Return On Invested Capital over the past 3 years of 6.51%. This is significantly below the industry average of 12.03%.
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
NOW has a better Profit Margin (13.41%) than 78.29% of its industry peers.
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 81.14% of the companies in the same industry.
NOW's Operating Margin has improved in the last couple of years.
The Gross Margin of NOW (78.92%) is better than 78.29% 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 below the Cost of Capital (WACC), so NOW is destroying value.
NOW has more shares outstanding than it did 1 year ago.
The number of shares outstanding for NOW has been increased compared to 5 years ago.
Compared to 1 year ago, NOW has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 12.08 indicates that NOW is not in any danger for bankruptcy at the moment.
The Altman-Z score of NOW (12.08) is better than 90.39% of its industry peers.
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.
The Debt to FCF ratio of NOW (0.41) is better than 78.65% 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 | 0.41 | ||
| Altman-Z | 12.08 |
ROIC/WACC0.91
WACC10.48%
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 70.46% 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 69.75% 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.
NOW shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 33.14% yearly.
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 18.77% 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 19.47% on average per year.
EPS Next Y18.72%
EPS Next 2Y19.86%
EPS Next 3Y20.68%
EPS Next 5Y18.77%
Revenue Next Year18.64%
Revenue Next 2Y18.98%
Revenue Next 3Y19.22%
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.
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.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 67.13, NOW can be considered very expensive at the moment.
NOW's Price/Earnings ratio is in line with the industry average.
The average S&P500 Price/Earnings ratio is at 28.22. NOW is valued rather expensively when compared to this.
A Price/Forward Earnings ratio of 48.84 indicates a quite expensive valuation of NOW.
The rest of the industry has a similar Price/Forward Earnings ratio as NOW.
The average S&P500 Price/Forward Earnings ratio is at 20.86. NOW is valued rather expensively when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 67.13 | ||
| Fwd PE | 48.84 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, NOW is valued a bit cheaper than 60.50% 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 | 55.76 | ||
| EV/EBITDA | 91.46 |
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.
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 20.68% in the coming years.
PEG (NY)3.59
PEG (5Y)2.03
EPS Next 2Y19.86%
EPS Next 3Y20.68%
5. Dividend
5.1 Amount
No dividends for NOW!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
977.36
+19.41 (+2.03%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners92.16%
Inst Owner Change1.64%
Ins Owners0.17%
Ins Owner Change-1.61%
Market Cap202.31B
Analysts82.35
Price Target1044.16 (6.83%)
Short Float %1.84%
Short Ratio1.77
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)1.65%
Min EPS beat(2)-0.99%
Max EPS beat(2)4.29%
EPS beat(4)3
Avg EPS beat(4)4.74%
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)-12.64%
PT rev (3m)-4.56%
EPS NQ rev (1m)-0.38%
EPS NQ rev (3m)-3.01%
EPS NY rev (1m)-0.22%
EPS NY rev (3m)-1.9%
Revenue NQ rev (1m)-0.1%
Revenue NQ rev (3m)-1.57%
Revenue NY rev (1m)-0.11%
Revenue NY rev (3m)-1.62%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 67.13 | ||
| Fwd PE | 48.84 | ||
| P/S | 17.64 | ||
| P/FCF | 55.76 | ||
| P/OCF | 43.95 | ||
| P/B | 19.95 | ||
| P/tB | 23.51 | ||
| EV/EBITDA | 91.46 |
EPS(TTM)14.56
EY1.49%
EPS(NY)20.01
Fwd EY2.05%
FCF(TTM)17.53
FCFY1.79%
OCF(TTM)22.24
OCFY2.28%
SpS55.41
BVpS48.98
TBVpS41.57
PEG (NY)3.59
PEG (5Y)2.03
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 | 12.08 |
F-Score8
WACC10.48%
ROIC/WACC0.91
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 Y18.72%
EPS Next 2Y19.86%
EPS Next 3Y20.68%
EPS Next 5Y18.77%
Revenue 1Y (TTM)21.01%
Revenue growth 3Y23.05%
Revenue growth 5Y25.99%
Sales Q2Q%18.63%
Revenue Next Year18.64%
Revenue Next 2Y18.98%
Revenue Next 3Y19.22%
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%