Amidst today's fast-paced and highly competitive business environment, it is crucial for investors and industry enthusiasts to conduct comprehensive company evaluations. In this article, we will delve into an extensive industry comparison, evaluating ServiceNow NOW in comparison to its major competitors within the Software industry. By analyzing critical financial metrics, market position, and growth potential, our objective is to provide valuable insights for investors and offer a deeper understanding of company's performance in 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 | 137.01 | 20.63 | 18.39 | 4.66% | $0.72 | $2.44 | 18.63% |
| Microsoft Corp | 37.95 | 11.34 | 13.58 | 8.27% | $40.71 | $48.15 | 13.27% |
| Oracle Corp | 52.99 | 31.59 | 11.48 | 18.43% | $6.83 | $11.16 | 11.31% |
| Palo Alto Networks Inc | 113.20 | 18.16 | 15.72 | 3.85% | $0.4 | $1.67 | 15.33% |
| Fortinet Inc | 42.06 | 39.86 | 12.87 | 25.08% | $0.56 | $1.25 | 13.77% |
| Gen Digital Inc | 28.95 | 8.15 | 4.73 | 6.43% | $0.53 | $0.81 | 4.77% |
| Monday.Com Ltd | 299.72 | 13.99 | 15.22 | 2.57% | $0.01 | $0.25 | 30.12% |
| CommVault Systems Inc | 101.48 | 23.35 | 7.74 | 10.11% | $0.03 | $0.23 | 23.17% |
| Dolby Laboratories Inc | 28.81 | 2.84 | 5.61 | 3.61% | $0.14 | $0.33 | 1.38% |
| Qualys Inc | 29.44 | 10.50 | 8.60 | 9.75% | $0.06 | $0.13 | 9.67% |
| Progress Software Corp | 41.46 | 5.13 | 2.76 | 3.85% | $0.08 | $0.19 | 35.57% |
| Teradata Corp | 16.45 | 14.03 | 1.33 | 30.24% | $0.09 | $0.25 | -10.11% |
| N-able Inc | 102.25 | 2 | 3.28 | -0.93% | $0.01 | $0.09 | 3.91% |
| Rapid7 Inc | 58.56 | 29.26 | 1.78 | 5.98% | $0.02 | $0.15 | 2.51% |
| Average | 73.33 | 16.17 | 8.05 | 9.79% | $3.81 | $4.97 | 11.9% |
Through an analysis of ServiceNow, we can infer the following trends:
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The Price to Earnings ratio of 137.01 for this company is 1.87x above the industry average, indicating a premium valuation associated with the stock.
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It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 20.63 which exceeds the industry average by 1.28x.
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With a relatively high Price to Sales ratio of 18.39, which is 2.28x the industry average, the stock might be considered overvalued based on sales performance.
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The company has a lower Return on Equity (ROE) of 4.66%, which is 5.13% 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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With lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $720 Million, which is 0.19x below the industry average, the company may face lower profitability or financial challenges.
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With lower gross profit of $2.44 Billion, which indicates 0.49x 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 18.63% exceeds the industry average of 11.9%, indicating strong sales performance and market outperformance.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio is a key indicator of a company's financial health and its reliance on debt financing.
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.
When evaluating ServiceNow alongside its top 4 peers in terms of the Debt-to-Equity ratio, the following insights arise:
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ServiceNow exhibits a stronger financial position compared to its top 4 peers in the sector, as indicated by its lower debt-to-equity ratio of 0.24.
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This suggests that the company has a more favorable balance between debt and equity, which can be seen as a positive aspect for investors.
Key Takeaways
For ServiceNow, the PE, PB, and PS ratios are all high compared to its peers in the Software industry, indicating potentially overvalued stock. On the other hand, the low ROE, EBITDA, and gross profit suggest lower profitability levels compared to industry peers. However, the high revenue growth rate indicates strong top-line performance relative to competitors.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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