Today we're going to take a look at the well-established ServiceNow, Inc. (NYSE:NOW). The company's stock saw a significant share price rise of 28% in the past couple of months on the NYSE. The company's trading levels have reached its high for the past year, following the recent bounce in the share price. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock's share price. However, what if the stock is still a bargain? Today we will analyse the most recent data on ServiceNow's outlook and valuation to see if the opportunity still exists.
Is ServiceNow Still Cheap?
According to our valuation model, ServiceNow seems to be fairly priced at around 11.18% above our intrinsic value, which means if you buy ServiceNow today, you'd be paying a relatively fair price for it. And if you believe that the stock is really worth $894.45, there's only an insignificant downside when the price falls to its real value. In addition to this, ServiceNow has a low beta, which suggests its share price is less volatile than the wider market.
What kind of growth will ServiceNow generate?
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. With profit expected to grow by 96% over the next couple of years, the future seems bright for ServiceNow. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? NOW's optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven't considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you've been keeping tabs on NOW, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it's worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
If you'd like to know more about ServiceNow as a business, it's important to be aware of any risks it's facing. At Simply Wall St, we found 1 warning sign for ServiceNow and we think they deserve your attention.
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.
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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.
