ServiceNow (NOW) Highlighted As Today's Perilous Reversal Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified ServiceNow ( NOW) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified ServiceNow as such a stock due to the following factors:

  • NOW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $70.9 million.
  • NOW has traded 1.2 million shares today.
  • NOW is down 3% today.
  • NOW was up 10.2% yesterday.

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More details on NOW:

ServiceNow, Inc. engages in the provision of cloud-based services to automate enterprise IT operations primarily in North America, Europe, the Middle East, Africa, and the Asia Pacific. Currently there are 8 analysts that rate ServiceNow a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for ServiceNow has been 1.6 million shares per day over the past 30 days. ServiceNow has a market cap of $7.2 billion and is part of the technology sector and computer software & services industry. The stock has a beta of 1.37 and a short float of 8% with 3.48 days to cover. Shares are up 75.1% year to date as of the close of trading on Friday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates ServiceNow as a sell. Among the areas we feel are negative, one of the most important has been generally deteriorating net income.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Software industry. The net income has significantly decreased by 145.3% when compared to the same quarter one year ago, falling from -$8.72 million to -$21.41 million.
  • SERVICENOW INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This year, the market expects an improvement in earnings (-$0.09 versus -$0.31).
  • Compared to other companies in the Software industry and the overall market, SERVICENOW INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for SERVICENOW INC is currently very high, coming in at 70.01%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -20.93% is in-line with the industry average.
  • Net operating cash flow has increased to $9.74 million or 40.30% when compared to the same quarter last year. In addition, SERVICENOW INC has also vastly surpassed the industry average cash flow growth rate of -17.33%.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.
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