NOW At Price Support Zone, Right Time To Buy?
ServiceNow (NOW) should be on your watchlist. Here is why – it is currently trading in the support zone ($868.11 – $959.49), levels from which it has bounced meaningfully before. In the last 10 years, the stock received buying interest at this level 3 times and subsequently went on to generate 15.1% in average peak returns.
| Peak Return | Days to Peak Return | |
|---|---|---|
| 8/30/2024 | 9.8% | 40 |
| 10/9/2024 | 24.7% | 111 |
| 4/24/2025 | 10.8% | 22 |
But is the price action enough alone? It certainly helps if the fundamentals check out. For NOW Read Buy or Sell NOW Stock to see how convincing this buy opportunity might be.
Here are some quick data points:
- Revenue Growth: 21.1% LTM and 22.3% last 3 year average.
- Cash Generation: Nearly 31.6% free cash flow margin and 13.3% operating margin LTM.
- Recent Revenue Shocks: The minimum annual revenue growth in last 3 years for NOW was 21.1%.
- Valuation: NOW trades at a PE multiple of 114.7
- Opportunity vs S&P: Compared to S&P, you get higher valuation, higher revenue growth, and lower margins
ServiceNow provides enterprise cloud solutions for workflow automation, AI, machine learning, robotics, analytics, and collaboration, enabling service management and operational efficiency worldwide.
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| NOW | S&P Median | |
|---|---|---|
| Sector | Information Technology | – |
| Industry | Systems Software | – |
| PE Ratio | 114.7 | 24.1 |
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| LTM* Revenue Growth | 21.1% | 5.1% |
| 3Y Average Annual Revenue Growth | 22.3% | 5.3% |
| Min Annual Revenue Growth Last 3Y | 21.1% | -0.1% |
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| LTM* Operating Margin | 13.3% | 18.7% |
| 3Y Average Operating Margin | 10.1% | 17.9% |
| LTM* Free Cash Flow Margin | 31.6% | 13.4% |
*LTM: Last Twelve Months
That is one way to look at stocks. Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure
What Is Stock-Specific Risk If The Market Crashes?
That said, this stock isn’t immune to big drops. It fell about 27% during the 2018 correction, over 30% during the Covid pandemic, and took a steeper hit near 51% in the recent inflation shock. Even with all the good fundamentals, these pullbacks show it can still get hit hard when the market sells off. Solid companies help, but sharp declines happen to most when volatility spikes.
But the risk is not limited to major market crashes. Stocks fall even when markets are in good shape – think events like earnings, business updates, outlook changes. Read NOW Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.