ServiceNow (NOW) Stock Drops Despite Market Gains: Important Facts to Note

Company Performance - ServiceNow's stock closed at $925.55, reflecting a -1.26% change from the previous trading day, underperforming the S&P 500's gain of 0.28% [1] - Over the past month, ServiceNow's shares gained 13.17%, outperforming the Computer and Technology sector, which saw a loss of 0.02%, and the S&P 500's gain of 2% [2] Upcoming Earnings - The upcoming earnings release is highly anticipated, with projected earnings per share (EPS) of $3.46, indicating an 18.49% increase year-over-year [3] - Revenue is expected to reach $2.74 billion, reflecting a 19.78% increase compared to the same quarter last year [3] Annual Estimates - For the annual period, earnings are estimated at $13.75 per share and revenue at $10.9 billion, representing increases of 27.55% and 21.51% respectively from the previous year [4] - Recent modifications to analyst estimates are crucial as they indicate changing business trends, with positive revisions suggesting a favorable outlook [4] Zacks Rank and Valuation - The Zacks Rank system currently rates ServiceNow at 2 (Buy), with a strong historical performance of stocks rated 1 delivering an average annual return of +25% since 1988 [6] - ServiceNow has a Forward P/E ratio of 68.17, which is significantly higher than the industry average of 27.06 [7] - The company has a PEG ratio of 2.77, compared to the industry average PEG ratio of 3.08, indicating a relatively favorable valuation considering expected earnings growth [8] Industry Context - The Computers - IT Services industry, part of the broader Computer and Technology sector, holds a Zacks Industry Rank of 67, placing it in the top 27% of over 250 industries [9] - Strong individual industry groups, as measured by the Zacks Industry Rank, tend to outperform weaker groups by a factor of 2 to 1 [9]