In today's rapidly changing and highly competitive business world, it is vital for investors and industry enthusiasts to carefully assess companies. In this article, we will perform a comprehensive industry comparison, evaluating ServiceNow NOW against its key competitors in the Software industry. By analyzing important financial metrics, market position, and growth prospects, we aim to provide valuable insights for investors and shed light on company's performance within the industry.
ServiceNow Background
ServiceNow Inc provides software solutions to structure and automate various business processes via a SaaS delivery model. The company primarily focuses on the IT function for enterprise customers. ServiceNow began with IT service management, expanded within the IT function, and more recently directed its workflow automation logic to functional areas beyond IT, notably customer service, HR service delivery, and security operations. ServiceNow also offers an application development platform as a service.
| Company | P/E | P/B | P/S | ROE | EBITDA (in billions) | Gross Profit (in billions) | Revenue Growth |
|---|---|---|---|---|---|---|---|
| ServiceNow Inc | 91.35 | 20.71 | 17.63 | 3.98% | $0.51 | $1.92 | 25.62% |
| Microsoft Corp | 38.26 | 13.20 | 13.88 | 9.53% | $33.39 | $42.4 | 17.58% |
| Oracle Corp | 32.12 | 59.51 | 6.52 | 50.61% | $5.3 | $9.41 | 7.11% |
| Palo Alto Networks Inc | 43.50 | 20.84 | 13.13 | 53.52% | $0.21 | $1.48 | 19.33% |
| CrowdStrike Holdings Inc | 844.70 | 32.81 | 24.92 | 2.48% | $0.12 | $0.64 | 32.63% |
| Gen Digital Inc | 10.10 | 5.88 | 3.79 | 5.96% | $0.47 | $0.77 | 1.6% |
| Dolby Laboratories Inc | 42.38 | 3.31 | 6.22 | 2.85% | $0.09 | $0.28 | -5.78% |
| Qualys Inc | 41.04 | 16.61 | 11.22 | 11.75% | $0.05 | $0.12 | 10.49% |
| Teradata Corp | 61.89 | 27.31 | 2.11 | -5.45% | $0.06 | $0.28 | 1.11% |
| N-able Inc | 96.23 | 3.25 | 5.51 | 1.35% | $0.03 | $0.09 | 13.22% |
| Progress Software Corp | 32.90 | 4.77 | 3.19 | 4.91% | $0.06 | $0.15 | 12.46% |
| Average | 124.31 | 18.75 | 9.05 | 13.75% | $3.98 | $5.56 | 10.97% |
By conducting an in-depth analysis of ServiceNow, we can identify the following trends:
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A Price to Earnings ratio of 91.35 significantly below the industry average by 0.73x suggests undervaluation. This can make the stock appealing for those seeking growth.
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With a Price to Book ratio of 20.71, which is 1.1x the industry average, ServiceNow might be considered overvalued in terms of its book value, as it is trading at a higher multiple compared to its industry peers.
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The Price to Sales ratio of 17.63, which is 1.95x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
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The company has a lower Return on Equity (ROE) of 3.98%, which is 9.77% below the industry average. This indicates potential inefficiency in utilizing equity to generate profits, which could be attributed to various factors.
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Compared to its industry, the company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $510 Million, which is 0.13x below the industry average, potentially indicating lower profitability or financial challenges.
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With lower gross profit of $1.92 Billion, which indicates 0.35x below the industry average, the company may experience lower revenue after accounting for production costs.
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The company's revenue growth of 25.62% is notably higher compared to the industry average of 10.97%, showcasing exceptional sales performance and strong demand for its products or services.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio assesses the extent to which a company relies on borrowed funds compared to its equity.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
By analyzing ServiceNow in relation to its top 4 peers based on the Debt-to-Equity ratio, the following insights can be derived:
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When considering the debt-to-equity ratio, ServiceNow exhibits a stronger financial position compared to its top 4 peers.
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This indicates that the company has a favorable balance between debt and equity, with a lower debt-to-equity ratio of 0.3, which can be perceived as a positive aspect by investors.
Key Takeaways
For ServiceNow, the PE ratio is low compared to peers, indicating potential undervaluation. The PB ratio is high, suggesting investors are willing to pay a premium for its assets. The PS ratio is also high, reflecting strong revenue generation relative to market value. In terms of ROE, EBITDA, gross profit, and revenue growth, ServiceNow shows lower performance compared to industry peers, indicating potential areas for improvement to enhance profitability and growth.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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