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ServiceNow Inc NOW

Morningstar Rating
$768.20 +8.46 (1.11%)
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Company Report

ServiceNow Earnings: Generative AI Contributes Meaningfully to Growth While Profitability Shines

Wide-moat ServiceNow closed 2023 with a bang as it delivered results that came in ahead of guidance for both revenue and profitability for its fourth quarter, and provided better-than-expected guidance. Our key takeaway was that the Pro Plus stock-keeping units, or SKUs, which include generative artificial intelligence, showed very strong demand since their September release and accounted for more net new annual contract value, or ACV, in the first full quarter of availability than any other previous ServiceNow solution. Management was careful to note that macroeconomic conditions have not changed despite a variety of positive indicators. Based on results and guidance, we have raised our estimates, particularly around profitability. We lift our fair value estimate to $770, from $640 previously. Given the run in the shares since late October, we see the stock as fairly valued.

Price vs Fair Value

NOW is trading at a 1% discount.
Price
$759.79
Fair Value
$553.00
Uncertainty
High
1-Star Price
$6,451.10
5-Star Price
$669.00
Economic Moat
Hvbb
Capital Allocation
Cyhqllsrl

Bulls Say, Bears Say

Bulls

ServiceNow’s superior product has led to rapid share gains and exceptional retention in the ITSM market. Now the company is using this strength to expand into other areas of ITOM.

Bears

As ServiceNow expands deeper into areas outside the core IT function, it will encounter an expanding set of competitors. Some of these will be better equipped to battle.

Is it the right time to buy, sell, or hold?
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News

Trading Information

Previous Close Price
$759.74
Day Range
$764.21773.32
52-Week Range
$405.84815.32
Bid/Ask
$767.46 / $768.48
Market Cap
$157.51 Bil
Volume/Avg
250,878 / 1.1 Mil

Key Statistics

Price/Earnings (Normalized)
70.54
Price/Sales
17.41
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield
0.35%

Company Profile

ServiceNow Inc provides software solutions to structure and automate various business processes via a SaaS delivery model. The company primarily focuses on the IT function for enterprise customers. ServiceNow began with IT service management, expanded within the IT function, and more recently directed its workflow automation logic to functional areas beyond IT, notably customer service, HR service delivery, and security operations. ServiceNow also offers an application development platform as a service.
Sector
Technology
Industry
Software - Application
Stock Style Box
Large Growth
Total Number of Employees
22,668

Competitors

Valuation

Metric
NOW
CRM
TEAM
Price/Earnings (Normalized)
70.5438.1893.69
Price/Book Value
20.395.0059.35
Price/Sales
17.418.7013.71
Price/Cash Flow
44.6424.6568.18
Price/Earnings
NOW
CRM
TEAM

Financial Strength

Metric
NOW
CRM
TEAM
Quick Ratio
0.940.861.01
Current Ratio
1.061.041.07
Interest Coverage
30.4213.09−8.72
Quick Ratio
NOW
CRM
TEAM

Profitability

Metric
NOW
CRM
TEAM
Return on Assets (Normalized)
14.90%8.01%16.02%
Return on Equity (Normalized)
34.22%12.86%92.08%
Return on Invested Capital (Normalized)
22.89%10.76%30.50%
Return on Assets
NOW
CRM
TEAM
See how this stock stacks up to its competitors with Morningstar Investor

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Economic Moat
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SHOP
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CDNS
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WDAY
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SNOW
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