ServiceNow, Inc.
ServiceNow, Inc. Fundamental Analysis
ServiceNow, Inc. (NOW) shows moderate financial fundamentals with a PE ratio of 52.86, profit margin of 12.59%, and ROE of 14.98%. The company generates $14.0B in annual revenue with strong year-over-year growth of 20.88%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 73.3/100 based on profitability, valuation, growth, and balance sheet metrics. The B grade reflects solid fundamentals with room for improvement in valuation or growth.
Fundamental Health Score
We analyze NOW's fundamental strength across five key dimensions:
Efficiency Score
WeakNOW struggles to generate sufficient returns from assets.
Valuation Score
WeakNOW trades at a premium to fair value.
Growth Score
ExcellentNOW delivers strong and consistent growth momentum.
Financial Health Score
ModerateNOW shows balanced financial health with some risks.
Profitability Score
WeakNOW struggles to sustain strong margins.
Key Financial Metrics
Is NOW Expensive or Cheap?
P/E Ratio
NOW trades at 52.86 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, NOW's PEG of 3.73 indicates potential overvaluation.
Price to Book
The market values ServiceNow, Inc. at 7.92 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 30.50 times EBITDA. This signals the market has high growth expectations.
How Well Does NOW Make Money?
Net Profit Margin
For every $100 in sales, ServiceNow, Inc. keeps $12.59 as profit after all expenses.
Operating Margin
Core operations generate 13.44 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $14.98 in profit for every $100 of shareholder equity.
ROA
ServiceNow, Inc. generates $7.21 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
ServiceNow, Inc. generates strong operating cash flow of $5.44B, reflecting robust business health.
Free Cash Flow
ServiceNow, Inc. generates strong free cash flow of $4.64B, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $4.48 in free cash annually.
FCF Yield
NOW converts 4.97% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
52.86
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
3.73
vs 25 benchmark
P/B Ratio
Price to book value ratio
7.92
vs 25 benchmark
P/S Ratio
Price to sales ratio
6.66
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.21
vs 25 benchmark
Current Ratio
Current assets to current liabilities
0.85
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.15
vs 25 benchmark
ROA
Return on assets percentage
0.07
vs 25 benchmark
ROCE
Return on capital employed
0.13
vs 25 benchmark
How NOW Stacks Against Its Sector Peers
| Metric | NOW Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 52.86 | 35.31 | Worse (Expensive) |
| ROE | 14.98% | 1063.00% | Weak |
| Net Margin | 12.59% | 5920926810.00% | Weak |
| Debt/Equity | 0.21 | 0.45 | Strong (Low Leverage) |
| Current Ratio | 0.85 | 4.97 | Weak Liquidity |
| ROA | 7.21% | -296056.00% (disorted) | Weak |
NOW outperforms its industry in 1 out of 6 key metrics, but lagging in P/E Ratio.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews ServiceNow, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
173.53%
Industry Style: Growth, Innovation, High Beta
High GrowthEPS CAGR
1267.60%
Industry Style: Growth, Innovation, High Beta
High GrowthFCF CAGR
183.70%
Industry Style: Growth, Innovation, High Beta
High Growth