ServiceNow, Inc. (NOW): A Bull Case Theory

We came across a bullish thesis on ServiceNow, Inc. (NOW) on Substack by Francesco Ferrari. In this article, we will summarize the bulls’ thesis on NOW. ServiceNow, Inc. (NOW)’s share was trading at $783.83 as of March 10^th. NOW’s trailing and forward P/E were 114.60 and 47.62 respectively according to Yahoo Finance.

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Owning quality stocks is essential for long-term success in equities, but defining quality varies based on perspective. One of the best indicators is Annual Recurring Revenue (ARR), a powerful KPI that highlights a company’s revenue stability. A business with 95% ARR suggests that it would generate most of its revenue the following year, making it highly resilient. This metric, combined with other financial robustness indicators, helps identify companies that can withstand market volatility. Amid a healthy market pullback, monitoring stocks with strong ARR and solid financials presents a compelling opportunity. ServiceNow (NOW) exemplifies this, with a 97% ARR, a three-year revenue CAGR of 23%, and a gross margin of 79.2%, reinforcing its financial strength. With a free cash flow margin of 31.1% and a net cash position of $7.6B, ServiceNow reinforces its status as a high-quality investment, while its stock beta of 1.03 suggests it moves in line with the broader market, offering relative stability. Evaluating such anti-fragile businesses provides confidence in navigating equities effectively, allowing investors to capitalize on resilient, high-growth opportunities amid market fluctuations.

ServiceNow, Inc. (NOW) is on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 110 hedge fund portfolios held NOW at the end of the third quarter which was 78 in the previous quarter. While we acknowledge the risk and potential of NOW as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NOW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.