Amidst the fast-paced and highly competitive business environment of today, conducting comprehensive company analysis is essential for investors and industry enthusiasts. 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 | 90.24 | 20.42 | 17.41 | 3.98% | $0.51 | $1.92 | 25.62% |
| Microsoft Corp | 36.86 | 12.71 | 13.37 | 9.53% | $33.39 | $42.4 | 17.58% |
| Oracle Corp | 30.85 | 79.41 | 6.06 | 80.28% | $5.16 | $9.2 | 5.43% |
| Palo Alto Networks Inc | 48.94 | 23.44 | 14.77 | 53.52% | $0.21 | $1.48 | 19.33% |
| Gen Digital Inc | 9.68 | 5.64 | 3.64 | 5.96% | $0.47 | $0.77 | 1.6% |
| Dolby Laboratories Inc | 42.63 | 3.33 | 6.25 | 2.85% | $0.09 | $0.28 | -5.78% |
| Qualys Inc | 41.52 | 16.80 | 11.35 | 11.75% | $0.05 | $0.12 | 10.49% |
| Teradata Corp | 60.48 | 26.62 | 2.06 | -5.45% | $0.06 | $0.28 | 1.11% |
| N-able Inc | 99.62 | 3.34 | 5.71 | 1.35% | $0.03 | $0.09 | 0.79% |
| Progress Software Corp | 33.55 | 5.03 | 3.39 | 3.39% | $0.05 | $0.14 | 12.63% |
| Average | 44.9 | 19.59 | 7.4 | 18.13% | $4.39 | $6.08 | 7.02% |
By closely studying ServiceNow, we can observe the following trends:
-
The current Price to Earnings ratio of 90.24 is 2.01x higher than the industry average, indicating the stock is priced at a premium level according to the market sentiment.
-
It could be trading at a premium in relation to its book value, as indicated by its Price to Book ratio of 20.42 which exceeds the industry average by 1.04x.
-
The Price to Sales ratio of 17.41, which is 2.35x the industry average, suggests the stock could potentially be overvalued in relation to its sales performance compared to its peers.
-
With a Return on Equity (ROE) of 3.98% that is 14.15% below the industry average, it appears that the company exhibits potential inefficiency in utilizing equity to generate profits.
-
The company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $510 Million, which is 0.12x below the industry average. This potentially indicates lower profitability or financial challenges.
-
With lower gross profit of $1.92 Billion, which indicates 0.32x below the industry average, the company may experience lower revenue after accounting for production costs.
-
The company is experiencing remarkable revenue growth, with a rate of 25.62%, outperforming the industry average of 7.02%.
Debt To Equity Ratio
The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.
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.
In light of the Debt-to-Equity ratio, a comparison between ServiceNow and its top 4 peers reveals the following information:
-
When considering the debt-to-equity ratio, ServiceNow exhibits a stronger financial position compared to its top 4 peers.
-
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
The high PE, PB, and PS ratios of ServiceNow indicate that the company is trading at a premium compared to its peers in the Software industry. However, the low ROE, EBITDA, and gross profit suggest that the company may not be efficiently utilizing its resources to generate profits. On the other hand, the high revenue growth rate implies that ServiceNow is experiencing strong top-line growth compared to its industry counterparts.
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.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
