Its time to talk about another major cloud stock that has been taking a beating through the recent correction. Here is the breakdown of $NOW, otherwise known as ServiceNow.
Current Price: $453.80
52/Wk High: $501.82
52/Wk Low: $213.99
Read below for the breakdown!
ServiceNow is a major cloud name, that provides cloud-based services for automated workflow tasks within major companies around the world.
Many of ServiceNow’s solutions cover tasks such as service management, human resources, security, and much more. In general, the cloud company provides major IT services to corporations.
Taking a more in-depth look, the thesis for ServiceNow of late is similar to the rest of the cloud names.
Due to COVID-19 cloud companies are seeing a tremendous boom in business due to the digital boom, and $NOW is well-positioned to take advantage.
Digging into the numbers, earnings have been growing at an excellent pace for years and there are no signs that ServiceNow’s growth will stop.
In the most recent earnings report, $NOW reported a beat for Q2 2020. ServiceNow beat on EPS with a $1.23 EPS versus the expected EPS consensus of $1.01.
Not only that but revenue also maintained its consistent growth. Second-quarter revenues totaled $1.1 billion, higher than last year’s Q2 revenues of $834 million.
While the numbers got even better ServiceNow also maintained a terrific subscription renewal rate, which held at a steady 97% for the third quarter in a row.
Exploring the balance sheet, management has kept things in line, and the numbers are not bad. When last reported total debt for $NOW decreased to $696 million in Q2 from Q1 when it stood at $701 million.
Management also has done a great job of building its cash on hand position. When last reported ServiceNow maintained a solid $2.343 billion cash on hand position as of June 30th.
Finally, $NOW management raised full-year 2020 guidance, with subscription revenues expected to total between $4.185 billion to $4.2 billion, presenting gains of 29% to 30% YOY on subscription revenues for 2020.
Given the positive growth outlook analysts a bullish on the cloud giant. Currently, the mean price target for $NOW sits at $487.80/share, representing a 7.49% gain.
Secondly, the high price target is $565.00/share, representing a 24.50% upside, and the low price target is $430.00/share, representing a -5.24% downside.
Not only are analysts bullish on $NOW but the big money is as well. Currently, 91.63% of ServiceNow is owned by institutions. Top holders include The Vanguard Group, BlackRock Institutional Investors, and State Street Global Advisors.
Finally, digging into the technicals, $NOW has been rather inactive since July, and the price from then to now hasn’t changed much.
On the otherhand, since the March lows, the stock has run significantly. Looking at the six-month charts the RSI currently sits at 50.68, which is right in the middle, presenting neither a buy nor sell signal.
Digging deeper into the charts, the six-month MACD sits from 6.56 to 3.92, creating downward momentum. The six-month CCI also sits at a low -54.93.
It is also important to note that the stock is currently bouncing off of both 50 day exponential and simple moving averages for the third time, and a break through them would present more downside.
ServiceNow stock on the otherhand continues to hold a long term upward direction, trades 43.88 points off its highs, and is overall bullish.
When it comes to the multiples, $NOW currently trades at an $87.0 billion market cap, P/E ratio of 124.51, and a P/S ratio of 22.12.
In short, I like $NOW for the months and years ahead. While it is trading at a high multiple, the company maintains solid growth, a firm balance sheet, and great forecasted growth.
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Disclaimer: This is not direction financial advice, simply opinion based on independent research. Luke Donay and Running With The Money are not responsible for any investment made based on the published information.