ServiceNow provides cloud-based solutions that define, structure, manage, and automate services to enterprise operations in North America, Europe, the Middle East, Africa, the Asia Pacific, and other countries. The Company provides cloud-based service management solutions that address the needs of a range of departments within an organization, including IT, human resources (HR), facilities, field service, marketing, legal and finance. The company was founded in 2004 and is based in Santa Clara, California.
NOW Price Forecast Based on DCF Valuation
DCF Fair Value Target:
Below please find a table outlining a discounted cash flow forecast for NOW, in which we model out valuation assuming a variety of terminal growth rates. To summarize, we found that ServiceNow Inc ranked in the 54th percentile in terms of potential gain offered. More precisely, our analysis suggests the stock is undervalued by approximately 33% on a DCF basis. The most interesting components of our discounted cash flow analysis for ServiceNow Inc ended up being:
The stock's equity weight, or the proportion of capital from equity relative to debt, is 99. Notably, its equity weight is greater than 87.83% of US equities in the Technology sector yielding a positive free cash flow.
The business' balance sheet reveals debt to be 1% of the company's capital (with equity being the remaining amount). Approximately only 6.74% of US stocks with free cash flow have a lower reliance on debt in their capital structure.
ServiceNow Inc's effective tax rate, as measured by taxes paid relative to net income, is at 141 -- greater than 97.61% of US stocks with positive free cash flow.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
PANW, OTEX, COMM, SPRS, and COUP can be thought of as valuation peers to NOW, in the sense that they are in the Technology sector and have a similar price forecast based on DCF valuation.
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ServiceNow (NYSE:NOW) stock has a very high valuation. Meanwhile, the company is likely to encounter increased competition, and some sectors of the economy are still struggling. Consequently, I believe that ServiceNow stock could underperform the Nasdaq in the near-term and/or the medium-term.Source: Shutterstock ServiceNow specializes in providing tools that automate companies' information technology (IT) functions. As a result, ServiceNow saves its customers money.Still, a number of companies that are being hit hard by the recession and the pandemic could shy away from making expensive, new commitments. That, in turn, could make it harder for ServiceNow to achieve the rapid growth that Wall Street is expecting. Analysts, on average, predict that its revenue will surge 24% in the ...
The COVID-19 pandemic has decimated the U.S. economy, yet the stock market is alive and well. Against the backdrop of a recession, the market actually had its strongest quarter in over 20 years, with the S&P 500 notching its largest quarterly gain since the last quarter of 1998, surging 20%. As for the NASDAQ, it climbed 31% higher during the quarter, marking its best quarterly performance since Q4 1999.While certainly volatile, the quarter saw investors take an optimistic approach due to reopening efforts and unprecedented stimulus packages. That being said, going forward into Q3, plenty of uncertainty is lingering over Wall Street. So, how are investors supposed to lock in on compelling plays? The Street’s pros can provide some much-needed inspiration, namely those from investment fir...