Cloud Stocks NOW and SPLK See High Demand With Buy Ratings 

NYSE: NOW | ServiceNow Inc. News, Ratings, and Charts

NOW – The cloud computing market is growing amid organizations investing in digitization and emerging technologies. Given the solid prospects of the industry, investors could consider adding fundamentally sound cloud stocks, ServiceNow (NOW) and Splunk (SPLK), which seem poised to see high demand. These stocks are Buy-rated in our proprietary rating system. Read on…

The software industry has not just weathered the pandemic-driven disruptions of the past few years, it has flourished. The industry is expected to continue to witness solid demand due to digital adoption, increasing automation, and demand for cloud services.

Here are two cloud stocks, ServiceNow, Inc. (NOW) and Splunk Inc. (SPLK), which are rated B (Buy) in our proprietary POWR Ratings system, could be ideal additions to your portfolios to capitalize on the industry tailwinds.

Cloud computing is central in all digital business models, from remote working to online classes and cloud kitchens to financial transactions. According to the latest forecast from Gartner, worldwide end-user spending on public cloud services is forecasted to grow 21.7% to $597.30 billion in 2023, up from $491 billion in 2022.

Moreover, 75% of organizations are expected to adopt a digital transformation model predicated on cloud as the fundamental underlying platform by 2026. The global cloud computing market is expected to expand at a compound annual growth rate (CAGR) of 14.1% from 2023 to 2030.

“Organizations today view cloud as a highly strategic platform for digital transformation, which is requiring cloud providers to offer more sophisticated capabilities as the competition for digital services heats up,” said Sid Nag, Vice President Analyst at Gartner.

Let’s discuss the stocks mentioned above in detail:

ServiceNow, Inc. (NOW)

NOW provides enterprise cloud computing solutions that defines, structures, consolidates, manages, and automates services for enterprises worldwide.

On March 22, NOW announced a major platform expansion with the Now Platform Utah release, which is built to help organizations future-proof their businesses and drive outcomes faster in the face of continued economic uncertainty.

On February 27, NOW and AT&T Inc. (T) announced a global telecom product to help communications service providers manage 5G and fiber network inventory.

Rohit Batra, vice president and head of telecommunications, media, and technology products at NOW, said, “Together, ServiceNow and AT&T will work to redefine network inventory, and we will continue to innovate to address the challenges communications service providers face now and in the future.”

NOW’s forward non-GAAP PEG multiple of 1.57 is 6.1% lower than the industry average of 1.67.

NOW’s trailing-12-month net income margin of 4.49% is 66.8% higher than the 2.69% industry average. Its trailing-12-month EBITDA margin of 10.88% is 16.9% higher than the 9.30% industry average.

During the fiscal fourth quarter that ended December 31, 2022, NOW’s non-GAAP total revenue increased 25.5% year-over-year to $2.03 billion. Its net income increased 476.9% year-over-year to $150 million, whereas its net income per share increased 469.2% year-over-year to $0.74.

NOW’s revenue is expected to increase 21.2% year-over-year to $2.09 billion during the fiscal first quarter that ended March 2023. Its EPS is expected to increase 18.5% year-over-year to $2.05 for the same quarter. Additionally, it has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.

The stock has gained 31.3% over the past six months to close the last trading session at $467.69.

NOW’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.  

It has an A grade in Growth and a B in Sentiment and Quality. The stock is ranked #10 in the 50-stock Software – Business industry.

Click here to see the POWR Ratings of NOW (Stability, Momentum, and Value).

Splunk Inc. (SPLK)

SPLK develops and markets cloud services and licensed software solutions in the United States and internationally.

On March 21, SPLK announced innovations to Splunk’s unified security and observability platform to help build safer and more resilient digital enterprises. SPLK’s latest innovations include enhancements to SPLK Mission Control and SPLUK Observability Cloud, and the general availability of SPLK Edge Processor.

With its platform, organizations can unify, simplify and modernize their workflows and business.

SPLK’s forward non-GAAP PEG multiple of 0.49 is 70.3% lower than the industry average of 1.67.

SPLK’s trailing-12-month gross profit margin of 77.67% is 53.7% higher than the 50.54% industry average.

SPLK’s total revenue increased 38.8% year-over-year to $1.25 billion in the fiscal fourth quarter, which ended January 31, 2023. Its gross profit increased 90.9% year-over-year to $1.05 billion, while its net income came in at $268.79 million, compared to a loss of $140.82 million in the previous-year quarter.

Also, its net income per share came in at $1.44, compared to a net loss per share of $0.88 in the previous-year quarter.

SPLK’s revenue is expected to rise 7.8% year-over-year to $726.79 million during the fiscal first quarter that ended April 2023. Additionally, it has topped consensus EPS and revenue estimates in each of the trailing four quarters.

The stock has gained 16.8% over the past six months to close the last trading session at $91.33.

SPLK’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.

SPLK also has a B grade for Growth, Quality, and Sentiment. It is ranked #5 out of 23 stocks in the Software – SAAS industry.

To access additional ratings for SPLK’s Momentum, Stability, and Value, click here.

What To Do Next?

Get your hands on this special report with 3 low priced companies with tremendous upside potential even in today’s volatile markets:

3 Stocks to DOUBLE This Year >

NOW shares were unchanged in premarket trading Friday. Year-to-date, NOW has gained 20.45%, versus a 8.11% rise in the benchmark S&P 500 index during the same period.

About the Author: Nidhi Agarwal

Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...

More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
NOWGet RatingGet RatingGet Rating
SPLKGet RatingGet RatingGet Rating
TGet RatingGet RatingGet Rating

Most Popular Stories on

3 Education Stocks to Buy for an AI World

AI is supposed to remake many areas of the economy, acting as a disruptor of current business operations. It’s becoming clear that one area quickly proclaimed a victim of AI, may actually be a huge beneficiary of the new technology. These three education and training stocks, Lincoln Educational Services (LINC), Perdoceo (PRDO) and Stride (LRN), are humming along in a ChatGPT world.

How Low Will Stocks Go?

The Fed threw some gasoline on the stock sell off fire last week. With that stocks are exploring new lows with the 200 day moving average in play at 4,195 for the S&P 500 (SPY). Is it time to buy stocks...or run for cover? 43 year investment veteran Steve Reitmeister shares his latest insights including how low he expects stocks to go. Plus information on his top 11 picks for today’s volatile market. Read on below for more...

My Favorite Energy Stock Under $10

Oil is back in the headlines as it has rocketed higher on a combination of factors over the past two months. This means oil stocks should definitely be back on your radar. And this under $10 oil stock has popped up on the POWR Ratings radar, Battalion Oil (BATL).

Buy Rating Issued on THIS 10% Yield Stock

In the current high mortgage rate environment, and with financial instability growing in the commercial real estate market, you want to be extra diligent when investing in mortgage lenders. This lender has a sterling track record of providing short term loans to those needing some quick extra cash. And Manhattan Bridge Capital (LOAN) is rewarding investors with a hefty dividend.

Stock Alert: Just Another BUY THE DIP Opportunity

Traders threw a tantrum after the Fed shared details on their rate hike plans. This has the S&P 500 (SPY) hitting the lowest level in quite a while. Gladly, things are not as dire as they seem. That is why Steve Reitmeister shares his latest insights to explain why a bull market is still in place...and how to target the best stocks and ETFs for the days ahead. Read on for the full story below...

Read More Stories

More ServiceNow Inc. (NOW) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All NOW News