ServiceNow Inc. (NOW) Clearly Signals Buy-Into the Stock: Don’t ignore the signals

ServiceNow Inc. (NYSE: NOW) stock jumped 3.74% on Friday to $471.45 against a previous-day closing price of $454.44. With 1.4 million shares changed hands, the volume of the stock remained lighter than its average volume of 1.83 million shares. During the session, the Software – Application company that operates in wider Technology sector, reached to the highest price of $472.91 whereas the lowest price it dropped to was $457.15. The 52-week range on NOW shows that it touched its highest point at $707.60 and its lowest point at $406.47 during that stretch. It currently has a 1-year price target of $566.96. Beta for the stock currently stands at 0.95.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of NOW was up-trending over the past week, with a rise of 5.09%, but this was down by -4.94% over a month. Three-month performance dropped to -2.16% while six-month performance fell -19.62%. The stock lost -19.36% in the past year, while it has lost -27.37% so far this year. A look at the trailing 12-month EPS for NOW yields 0.91 with Next year EPS estimates of 9.24. For the next quarter, that number is 1.85. This implies an EPS growth rate of 93.40% for this year and 26.53% for next year. EPS is expected to grow by 26.54% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of 19.60%.

Float and Shares Shorts:

At present, 200.96 million NOW shares are outstanding with a float of 198.71 million shares on hand for trading. On Jul 14, 2022, short shares totaled 4.0 million, which was 1.99% higher than short shares on Jun 14, 2022. In addition to Mr. William R. McDermott as the firm’s Pres, CEO & Director, Ms. Gina M. Mastantuono serves as its Chief Financial Officer.

Institutional Ownership:

Through their ownership of 89.68% of NOW’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 9.45% of NOW, in contrast to 50.27% held by mutual funds. Shares owned by individuals account for 39.66%. As the largest shareholder in NOW with 7.73% of the stake, The Vanguard Group, Inc. holds 15,487,132 shares worth 15,487,132. A second-largest stockholder of NOW, T. Rowe Price Associates, Inc., holds 14,217,086 shares, controlling over 7.09% of the firm’s shares. BlackRock Fund Advisors is the third largest shareholder in NOW, holding 9,469,308 shares or 4.72% stake. With a 2.95% stake in NOW, the Vanguard Total Stock Market Index is the largest stakeholder. A total of 5,911,024 shares are owned by the mutual fund manager. The Vanguard 500 Index Fund, which owns about 2.21% of NOW stock, is the second-largest Mutual Fund holder. It holds 4,437,261 shares valued at 2.11 billion. T Rowe Price Blue Chip Growth Fun holds 1.68% of the stake in NOW, owning 3,375,467 shares worth 1.61 billion.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for NOW since 32 analysts follow the stock currently. There are 28 analysts who recommend BUY ratings, while 1 suggest SELL ratings. Of the remaining analysts, 1 believe that the stock is worth HOLDING, 2 give it an OVERWEIGHT rating, and 0 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With NOW analysts setting a high price target of $752.00 and a low target of $490.00, the average target price over the next 12 months is $558.35. Based on these targets, NOW could surge 59.51% to reach the target high and rise by 3.93% to reach the target low. Reaching the average price target will result in a growth of 18.43% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. NOW will report FY 2022 earnings on 01/25/2023. Analysts have provided yearly estimates in a range of $7.50 being high and $7.19 being low. For NOW, this leads to a yearly average estimate of $7.30. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. ServiceNow Inc. surprised analysts by $0.05 when it reported $1.62 EPS against a consensus estimate of $1.57. The surprise factor in the prior quarter was $0.03. Based on analyst estimates, the high estimate for the next quarter is $1.94 and the low estimate is $1.76. The average estimate for the next quarter is thus $1.85.

Summary of Insider Activity:

Insiders traded NOW stock several times over the past three months with 53 Buys and 117 Sells. In these transactions, 35,534 shares were bought while 35,199 shares were sold. The number of buy transactions has increased to 170 while that of sell transactions has risen to 473 over the past year. The total number of shares bought during that period was 188,364 while 267,747 shares were sold.

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