ServiceNow (NOW)
Down over 52% this past year, the most interesting thing about ServiceNow’s decline is that it was caused solely by the collapse of its valuation multiple. They have seen their price to earnings fall from 116 to just 54 over the course over the past 12 months amid lowered earnings guidance and fears over competition from AI. However, we believe there is a good chance ServiceNow will be able to come back by at least 50% in the next year or two for these 5 reasons:
- Their underlying earnings have actually continued to grow on a quarter-over-quarter basis over the last year
- Their recently lowered PE and good EPS growth suggests a PEG ratio of 0.8
- ServiceNow has beat all 8 of it’s last earnings calls in a row
- Their TTM revenue jumped 22% year over year
- They are already adopting AI into their products which should help them combat other AI based products
| NOW | |
| Share Price | $90.45 |
| Earnings Per Share | $1.68 |
| EPS (Analyst Forward 1yr) | $2.81 |
| Price to Earnings | 53.8 |
| EPS Growth (Projected 1 yr) | 67.3% |
| PEG | 0.8 |
Between their revenue/earnings forecasts, solid PEG ratio, and recent earnings beats we label this a medium risk, high reward stock and put it as a Buy with a +35% one year forecast. The average analyst rating for ServiceNow stock is a Strong Buy with a +93% one year upside.
Topics: ServiceNow stock review, NOW stock analysis
