Australia markets close in 5 hours 38 minutes
  • ALL ORDS

    7,737.10
    -8.80 (-0.11%)
     
  • ASX 200

    7,529.70
    -9.30 (-0.12%)
     
  • AUD/USD

    0.6887
    -0.0037 (-0.54%)
     
  • OIL

    74.39
    +0.28 (+0.38%)
     
  • GOLD

    1,880.50
    +1.00 (+0.05%)
     
  • BTC-AUD

    32,997.61
    -556.07 (-1.66%)
     
  • CMC Crypto 200

    527.84
    +2.70 (+0.51%)
     
  • AUD/EUR

    0.6417
    +0.0006 (+0.09%)
     
  • AUD/NZD

    1.0920
    -0.0015 (-0.13%)
     
  • NZX 50

    12,151.52
    -45.63 (-0.37%)
     
  • NASDAQ

    12,464.51
    -108.85 (-0.87%)
     
  • FTSE

    7,836.71
    -65.09 (-0.82%)
     
  • Dow Jones

    33,891.02
    -34.99 (-0.10%)
     
  • DAX

    15,345.91
    -130.52 (-0.84%)
     
  • Hang Seng

    21,222.16
    -438.31 (-2.02%)
     
  • NIKKEI 225

    27,693.65
    +184.19 (+0.67%)
     

Should You Think About Buying ServiceNow, Inc. (NYSE:NOW) Now?

ServiceNow, Inc. (NYSE:NOW) saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s examine ServiceNow’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for ServiceNow

Is ServiceNow Still Cheap?

Good news, investors! ServiceNow is still a bargain right now. My valuation model shows that the intrinsic value for the stock is $611.21, but it is currently trading at US$409 on the share market, meaning that there is still an opportunity to buy now. ServiceNow’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

What does the future of ServiceNow look like?

earnings-and-revenue-growth
earnings-and-revenue-growth

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. ServiceNow's earnings over the next few years are expected to double, indicating a very optimistic future ahead. This should lead to stronger cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? Since NOW is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on NOW for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy NOW. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. For example - ServiceNow has 1 warning sign we think you should be aware of.

If you are no longer interested in ServiceNow, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Join A Paid User Research Session
You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here