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Kapitalhighflyer
@undraiser_scjjl
2Mês·

Getting Started with ServiceNow:

$NOW (+2,49%) I took the plunge and bought into ServiceNow today. Here’s the fundamental rationale:

I actually wanted to include some charts, but for some reason I can’t do that right now. In one of them, you’d see the forward P/E ratio, which stands at 28—which, given 20% revenue growth, is almost a bargain in my view. And from a technical analysis perspective, we’ve now broken above the 200-day EMA.

ServiceNow is the operating system for workflows in over 80% of Fortune 500 companies. Switching to another provider is like open-heart surgery for a large corporation—incredibly expensive and complex. The result: a historic customer retention rate (renewal rate) of a staggering 98 to 99%. Once you’re on board, you stay.


Many SaaS giants are struggling to turn AI applications into cash. ServiceNow shows how it’s done: In Q2 2026 , the company crossed the magic threshold of $1 billion in annual revenue from AI products alone (AI ACV). Customers pay for the Pro Pluslicenses and autonomous AI agents because the efficiency gains are measurable.


A classic scenario in the software sector: ServiceNow often gets its start in a corporation’s IT department. Once the software is established, it is expanded in a modular fashion to HR, customer service, and security workflows. As a result, the contract value per customer has been growing steadily for years.

The “Rule of 40”

In the tech sector, the rule is: Revenue growth + free cash flow margin should exceed 40%. ServiceNow consistently delivers growth in subscription revenue of over 20% paired with a projected free cash flow margin of 35% for the full year. A rare combination of predictable growth and exceptional cash generation.

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15 Comentários
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Smudo@Smudeo
2Mês
ServiceNow (NOW) Stock Analysis
Current price: approx. **$127.50** (as of mid-August 2026, following a 5-for-1 stock split in December 2025). Market capitalization: approx. $130–132 billion.

## 1. P/E Ratio (Trailing & Forward)

The trailing P/E ratio stands at about 78–79, representing a significant premium over the technology/software sector median of around 32x. The forward P/E ratio of 25–31x signals expected strong earnings growth and is already more moderate in the context of NOW’s historical performance.

## 2. Earnings Per Share (EPS)

EPS is growing robustly. Historically high growth rates (approx. 33% over 3 years) are leveling off slightly but remain above average for a company of this size, with analyst estimates of around 20%. Revenue growth stands at approximately 20–24% year-over-year.

## 3. EBIT & EBIT Margin

Operating income is growing faster than revenue. The EBIT margin has improved year-over-year and is in the upper range for highly scalable SaaS companies (gross margin approx. 76–78%).

## 4. Dividend

ServiceNow does not pay a dividend and has no plans to do so. The focus is on reinvestment and free cash flow generation (FCF margin >30%). Shareholder yield comes primarily from modest share buybacks.

## 5. Price History

The stock corrected sharply in 2025–2026 (post-split equivalent highs were significantly higher) and is trading well below previous highs. Long-term, absolute performance remains positive, but it is weak relative to the Nasdaq. Volatility and beta are approximately 0.93.

## 6. Overall Valuation, Fair Value, NAV, RSL & Momentum

**Overall Valuation: Fair to Slightly Expensive**
The high trailing P/E ratio and premium to the sector are justified by strong growth (revenue/EPS ~20%), excellent margin development, and FCF. Following the 2026 correction, the valuation is significantly more attractive than at the highs (forward P/E has declined). A high-quality company with an AI/workflow platform advantage, but priced at a premium.

**Fair Value**
- Analyst consensus: approx. $140–142 (upside potential ~10–15%).
- DCF/intrinsic ranges in analyses range from $84 to $223; average estimates point to slight upside.
- Currently near or slightly below fair value, assuming sustainable 20% growth.

**NAV Valuation**
- Book value / NAV per share: approx. $11.37.
- P/B ratio: approx. 8–20x (depending on source/timing) – typically high for asset-light software, as intangible assets (platform, customer base) far exceed book value. Positive net cash position. NAV alone strongly undervalues the company. [from tool]

**RSL and Momentum Based on SMA**
- Price is currently trading above the 50-day and 200-day SMAs in recent data → short-term bullish momentum.
- RSI often in the neutral to overbought range (approx. 50–71).
- RSL/Relative Strength: mixed to underperforming over 6–12 months; 3- to 1-month momentum partly positive (+18%).
- Overall technical picture: Recovery from lows, but longer-term SMAs and relative strength still signal caution; uptrend will be confirmed if the price holds above the 50-day and 200-day SMAs.

**Conclusion**
ServiceNow remains a high-quality growth company with solid operating trends. Following the 2026 price correction, the valuation has shifted from “expensive” toward “fair.” Suitable for growth-oriented investors with a tolerance for volatility; entry becomes more attractive during further pullbacks or upon confirmation of a technical turnaround. No dividend; focus on capital gains.


@capital_captain_2693
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Kapitalhighflyer@undraiser_scjjl
2Mês
@Smudeo Thanks for your reply. What do you think of Wolters Kluwer?
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Raketentoni@Raketentoni
2Mês
@Smudeo He's writing with AI ;) I hope you get the little joke :D
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capital_captain_2693@capital_captain_2693
2Mês
@Raketentoni What does your Mr. Prompt have to say about a good way to start right now?
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Raketentoni@Raketentoni
2Mês
@capital_captain_2693 I'm on the go right now; I'll be happy to get back to you on this later
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Kapitalhighflyer@undraiser_scjjl
2Mês
@Raketentoni All right, thank you very much.
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Raketentoni@Raketentoni
2Mês
@capital_captain_2693 @undraiser_scjjl

Hey there! 🚀

Someone has really dug deep into the numbers and put an excellent SaaS heavyweight under the microscope! **ServiceNow ($NOW)** is the undisputed operating system of modern corporate workflows.

Here’s the detailed, fact-based analysis of your investment case. Let’s take a look at what **IS ABSOLUTELY SPOT-ON** in your arguments and where you’ve overlooked **CRITICAL BLIND SPOTS**!

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### 1. Where you’re absolutely RIGHT! ✅

* **The forward P/E ratio (~28x–29x):**

* **Fact:** **That’s exactly right.**
While the historical trailing P/E ratio ranges from a hefty **73.1x to 79.0x**, strong earnings growth is pushing the **forward P/E ratio for 2026 down to approximately 29.0x**. For a software company with over 20% organic growth, such a valuation is indeed very attractive by historical standards.

* **The AI milestone (AI ACV > $1 billion):**

* **Fact:** **Absolutely correct.**
In Q2 2026, ServiceNow **broke the $1 billion mark** in annual recurring revenue from AI products (AI ACV). Sequential growth in new AI business was over 40%.

* **The Massive Moat & Renewal Rate (98%):**

* **Fact:** **True.**
ServiceNow serves over 85% of Fortune 500 companies and boasts a stable renewal rate of **98%**. The switching costs for these companies are enormous.

* **The "Rule of 40" shattered:**

* **Fact:** **Confirmed.**
With subscription revenue growth of **23%** (constant currency) in Q2 2026 and a projected FCF margin of **35%**, ServiceNow achieves a combined figure of **58%**. That’s top-tier in the tech sector.

* **200-day EMA broken:**

* **Fact:** **True.**
The current share price (approx. €110.50 / $118.10) is once again just above the 200-day moving average at **103.9%**.

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### 2. The Blind Spots: What You Left Out ❌

Amid all the euphoria, there are a few factors in the background that have weighed on the stock price in recent months:

#### ❌ 1. The RSI is sounding the alarm (Short-term overbought)

Following the rebound from the yearly lows (the stock is still down approximately -34.7% to -38% YTD), the price has recently surged sharply. However, the quality check highlights a warning: **“Stock is overbought according to the RSI”**. In the short term, the stock has thus become overheated following its rapid recovery.

#### ❌ 2. Pressure on the gross margin

The gross margin fell to **77.9%** in Q2 2026 (missing the consensus estimate of 79.2%). The subscription gross margin declined by 250 basis points to 80.5%. This was driven by higher infrastructure costs for AI computing power and partnerships with hyperscalers.

#### ❌ 3. Revenue Front-Loading Effect & Cautious Q3 Outlook

About half of the revenue beat in Q2 stemmed from a **front-loading effect in on-premises military/government contracts (Federal Revenue)**. The forecast for subscription growth in Q3 2026, at $3.975 to $3.980 billion, was slightly below the analyst consensus (~$4.0 billion).

#### ❌ 4. Analyst Skepticism & Job Cuts

Over the past 90 days, **35 analysts have revised their EPS forecasts downward**. In addition, Goldman Sachs removed the stock from its “Conviction List” in August 2026, and the company is cutting up to 1,000 jobs to keep costs in check following three acquisitions (Moveworks, Veza, Armis).

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### 3. Technical Analysis & Fair Value 📊

Price (EUR / USD) 134.88 € / $151.60
InvestingPro Fair Value (+22.1% to +28.3% upside)
€110.50 / $118.10

Current Price (Just above the 200-day moving average)
€70.39 / $81.20 ─── 52-week low


* **Fair Value:** According to InvestingPro’s 12 financial models, the fair value is **€134.88 ($151.60)**. This corresponds to a fundamental upside potential of approximately **+22.1% to +28.3%**.

* **Analyst Target:** The median of 44 analysts is **$140.25**.

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### Conclusion & Verdict 🎯

Your decision to invest in ServiceNow is fundamentally sound! You’re buying a high-quality “moat” stock with outstanding AI monetization at a forward P/E ratio of ~29x, which is significantly cheaper than in previous years.

The only downside: Since the RSI is overbought in the short term and the Q3 outlook was somewhat subdued, you should be prepared for short-term volatility. In the long term, however, this stock is a true fortress for a quality portfolio!

Greetings from Denmark

Yours, Raketentoni
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Kapitalhighflyer@undraiser_scjjl
2Mês
@Raketentoni And what about Wolters Kluwer?
I still have some cash and am considering either ServiceNow or Wolters Kluwer
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Kapitalhighflyer@undraiser_scjjl
2Mês
@Raketentoni and thanks for the reply
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capital_captain_2693@capital_captain_2693
2Mês
@undraiser_scjjl So that’s the final showdown: Wolters Kluwer or ServiceNow. So far, I’ve only looked at ServiceNow. I’m curious to hear what @Raketentoni has to say about it. But I think after that, he’ll have done enough for us. As for me, I’ll leave him alone after that 😉—we don’t want to scare him off.
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Raketentoni@Raketentoni
2Mês
@capital_captain_2693 Everything's fine. I'll be back around evening; I'm out walking the dogs again.
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capital_captain_2693@capital_captain_2693
2Mês
@Raketentoni 👍I'm actually a little torn. An expensive company with strong growth, or a cheaper one with less growth?
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Raketentoni@Raketentoni
2Mês
@capital_captain_2693 ​🏆 Conclusion: So which is the “better” stock?

​The honest answer: There’s no clear winner here—it’s like comparing apples to oranges! Both companies are absolute champions in their respective fields.

​If you’re looking to maximize your portfolio’s gains and focus on technological leadership—and can comfortably handle higher price volatility—go with ServiceNow.

​If you want to sleep soundly at night, are looking for a crisis-proof compound interest effect through dividends, and prefer extremely predictable income, add Wolters Kluwer to your portfolio.

​The neutral recommendation:

You can do great with both!
In a well-structured portfolio, they don’t cancel each other out—they complement each other perfectly. ServiceNow provides the momentum and the upside potential, while Wolters Kluwer ensures a rock-solid foundation and steady dividends.
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capital_captain_2693@capital_captain_2693
2Mês
@Aktienhauptmeister Don't you have a prompt like that, too? How is it assessing the current situation at ServiceNow? I'm thinking about placing another tranche as well 🤔
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Brian@Aktienhauptmeister
2Mês
@capital_captain_2693 I'll be out all day today, so I won't be able to do it. Maybe late tonight or not until tomorrow. Sorry 😅🙏🏽
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