ServiceNow, Inc. (NOW) offers cloud computing solutions, information technology service management applications, and digital workflow products to organizations worldwide. The company has been helping enterprises accelerate digital transformation by connecting teams and systems amid the global coronavirus pandemic.

With more customers using NOW’s diversified products, the company seems poised to soar in the coming months.

NOW’s robust workflow platform and its ability to meet the evolving needs of customers have driven a 101% gain in its stock over the past year. This impressive performance, combined with several other factors, has helped NOW earn a “Strong Buy” rating in our proprietary rating system.

Here is how our proprietary POWR Ratings system evaluates NOW:

Trade Grade: A

NOW is currently trading above its 50-day and 200-day moving averages of $513.09 and $416.89, respectively, indicating that the stock is in an uptrend. Also, the stock has gained 20.5%, over the past three months, reflecting solid short-term bullishness.

NOW’s revenue has increased 30% year-over-year to $1.15 billion in the third quarter ended September30, 2020. The increase in revenue was primarily attributable to the significant increase in subscription volume.

On November 30, the company announced that it has signed an agreement to acquire Element AI, a leading artificial intelligence company. This acquisition will allow NOW to accelerate its AI innovation and overall operations worldwide. And on November 18, NOW and Workplace from Facebook announced new integrations designed to create great experiences for the growing distributed workforce by enabling organizations to streamline communication between executives. This collaboration will help NOW serve more customers across all industries and boost productivity.

Buy & Hold Grade: A

In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold Grade considers, NOW is well positioned. The stock is currently trading just 1.4% below its 52-week high of $545, which it hit on December 9.

The company’s net revenue has grown at a CAGR of 34% over the past three years, while EBITDA increased at a CAGR of 199.4% over this period. This can be attributed to the company’s growing platform and product innovations and expanded partnerships with leading tech giants.

Peer Grade: B

NOW is currently ranked #1 of 48 stocks in the Software – Business group. Other popular stocks in this group are Autodesk, Inc. (ADSK), SS&C Technologies Holdings, Inc. (SSNC) and Tyler Technologies, Inc. (TYL).

SSNC, ADSK, and TYL have gained 22%, 55.7%, and 61.3% over the past year, respectively. This compares to NOW’s 101% returns over this period.

Industry Rank: B

The Software – Business group is ranked #45 of the 123 StockNews.com industries. The companies in this industry design, develop, publish, and support software that are used to collect, store, report, and analyze data from various business operations.

The pandemic has deepened individuals’ and businesses’ reliance on cloud computing services, which have become essential to home workers. With COVID-19 redefining the future structure of work, the demand for business software tools should see strong momentum heading into 2021.

Overall POWR Rating: A (Strong Buy)

NOW is rated “Strong Buy” due to its impressive financials, short- and long-term bullishness, solid price momentum, and underlying industry strength, as determined by the four components of our overall POWR Rating.

Bottom Line

NOW is well positioned to climb in the upcoming months despite gaining 101% over the past year. As organizations’ dependence on technology increases, the company’s innovative digital workflow solutions could significantly contribute to its revenue growth.

Analyst sentiment, which gives a good sense of a stock’s future price movement, is positive for NOW. It has an average broker rating of 1.22, indicating favorable analyst sentiment. Of27 Wall Street analysts that rated the stock, 25 rated it a “Strong Buy.” The consensus EPS estimate of $1.06 for the current quarter ending December 31,2020 indicates a 10.4% improvement year-over-year. Moreover, NOW has an impressive earnings surprise history, with the company beating consensus EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $1.22 billion for the current quarter represents a 27.9% increase from the same period last year.

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NOW shares were unchanged in after-hours trading Monday. Year-to-date, NOW has gained 88.61%, versus a 14.92% rise in the benchmark S&P 500 index during the same period.

Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization.

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