ServiceNow, Inc. (NOW) Stock Analysis
ServiceNow, Inc. (NOW) Stock Analysis
Analysis from 10-Q filed 2025-10-30. Data as of Q4 2025.
Overall Grade: F (Concerning)
ServiceNow, Inc. faces challenges in financial performance that warrant careful analysis.
| Metric | Value | Context |
|---|---|---|
| ROIC | 12.9% | Solid returns |
| FCF Margin | 34.1% | Strong cash generation |
| Debt/Equity | 0.0x | Conservative leverage |
Investment Thesis: Healthy free cash flow margin of 34.1% provides financial flexibility for growth and shareholder returns.
Explore ServiceNow, Inc.: Earnings History | Filing Intelligence | ROIC Analysis
Profitability: ServiceNow, Inc. earns 12.9% ROIC, Top 50% in Technology
ServiceNow, Inc.'s trailing-twelve-month ROIC of 12.9% ranks Top 50% in Technology companies (sector median: 5.0%), driven by NOPAT margin of 10.6% combined with asset turnover of 0.6x. Source: 10-Q filed 2025-10-30. Gross margin of 77.5% with operating margin at 13.7% reflects strong pricing power.
| Metric | NOW | Rating | Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 12.9% | Good | Above sector median of 5.0% |
| Return on Equity (ROE) | 16.0% | Good | Efficient use of shareholder equity |
| Gross Margin | 77.5% | Excellent | Strong pricing power |
| Operating Margin | 13.7% | Good | Moderate operational efficiency |
Cash Flow: ServiceNow, Inc. generates $4.5B FCF at 34.1% margin, positive NaN/8 quarters
ServiceNow, Inc. generated $4.5B in free cash flow (TTM), a 34.1% FCF margin, a margin that ranks Top 10% in Technology. Operating cash flow exceeds net income by 3.1x, indicating high earnings quality. FCF was positive in N/A of the last 8 quarters. Source: 10-Q filed 2025-10-30.
| Metric | NOW | Rating | Context |
|---|---|---|---|
| Free Cash Flow Margin | 34.1% | Excellent | Excellent cash conversion |
| Free Cash Flow (TTM) | $4.5B | Good | Positive cash generation |
| OCF/Net Income | 3.1x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
Balance Sheet: ServiceNow, Inc. at 0.0x leverage
ServiceNow, Inc.'s debt-to-equity ratio of 0.0x reflects conservative leverage. Source: 10-Q filed 2025-10-30.
| Metric | NOW | Rating | Context |
|---|---|---|---|
| Debt to Equity | 0.0x | Excellent | Conservative capital structure |
Valuation: ServiceNow, Inc. trades at 90.6x earnings
ServiceNow, Inc. trades at a P/E of 90.6x. Free cash flow yield of 2.9% reflects market expectations for growth.
| Metric | NOW | Rating | Context |
|---|---|---|---|
| P/E Ratio | 90.6x | Warning | Premium valuation |
| EV/Sales | 11.5x | Warning | Growth premium priced in |
| FCF Yield | 2.9% | Adequate | Lower cash yield |
Capital Allocation: ServiceNow, Inc. returns 1.2% shareholder yield
ServiceNow, Inc.'s total shareholder yield is 1.2% (dividends + buybacks 1.2%). Source: 10-Q filed 2025-10-30.
| Metric | NOW | Rating | Context |
|---|---|---|---|
| Total Shareholder Yield | 1.2% | Adequate | Dividend + buyback yield combined |
| Buyback Yield | 1.2% | Adequate | Minimal buyback activity |
| Total Capital Returned (TTM) | $1.8B | Good | Dividends + buybacks returned to shareholders |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 12.9% | Top 50% | 2.6x above |
| Free Cash Flow Margin | 34.1% | Top 10% | 4.0x above |
| Gross Margin | 77.5% | Top 25% | 1.5x above |
| Operating Margin | 13.7% | Top 50% | 2.9x above |
| Return on Equity (ROE) | 16.0% | Top 50% | 3.1x above |
| P/E Ratio | 90.6x | N/A | - |
Financial Scorecard
| Metric | NOW | Rating | Sector Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 12.9% | Good | Top 50% of sector (median: 5.0%) |
| Free Cash Flow Margin | 34.1% | Excellent | Top 10% of sector (median: 8.5%) |
| Gross Margin | 77.5% | Excellent | Top 25% of sector (median: 51.1%) |
| Debt to Equity Ratio | 0.0% | Excellent | Conservative capital structure |
| P/E Ratio (Price-to-Earnings) | 90.6x | Warning | High expectations priced in |
| Free Cash Flow Yield | 2.9% | Warning | Growth-focused valuation |
Frequently Asked Questions
Q: What is ServiceNow, Inc.'s Return on Invested Capital (ROIC)?
ServiceNow, Inc. (NOW) has a trailing twelve-month Return on Invested Capital (ROIC) of 12.9%. This compares above the sector median of 5.0%. An ROIC between 12-20% indicates solid capital allocation and sustainable competitive position.
Q: What is ServiceNow, Inc.'s Free Cash Flow Margin?
ServiceNow, Inc. (NOW) has a free cash flow margin of 34.1%, generating $4.5 billion in free cash flow over the trailing twelve months. A FCF margin above 20% indicates excellent cash conversion and a high-quality business model.
Q: Is ServiceNow, Inc. stock overvalued or undervalued?
ServiceNow, Inc. (NOW) trades at a P/E ratio of 90.6x, which is above the sector median of N/A. The EV/Sales multiple is 11.5x. Free cash flow yield is 2.9%, reflecting growth expectations priced into the stock.
Q: What is ServiceNow, Inc.'s revenue and earnings growth?
ServiceNow, Inc. (NOW) grew revenue by 20.9% year-over-year. Earnings per share increased by 22.6% compared to the prior year. Double-digit revenue growth indicates strong demand and market share gains.
Q: Is ServiceNow, Inc. buying back stock?
ServiceNow, Inc. (NOW) repurchased $1.8 billion of stock over the trailing twelve months. This represents a buyback yield of 1.2%.
Q: How does ServiceNow, Inc. compare to competitors in Technology?
Compared to other companies in Technology, ServiceNow, Inc. (NOW) shows: ROIC of 12.9% is above the sector median of 5.0% (Top 29%). FCF margin of 34.1% exceeds the sector median of 8.5% (Top 7% of sector). Gross margin at 77.5% is 26.4 percentage points higher than sector peers. These rankings are based on MetricDuck's analysis of all Technology companies with available SEC filings.
Q: What warning signs should I watch for with ServiceNow, Inc.?
ServiceNow, Inc. (NOW) shows no major financial warning signs based on current metrics. However, investors should always monitor: 1) Margin compression trends, 2) Cash flow consistency, 3) Debt levels relative to cash generation, and 4) Changes in competitive positioning.
Data Source: Data sourced from 10-Q filed 2025-10-30. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.
This analysis is for informational purposes only and does not constitute investment advice.