Here's Why ServiceNow (NOW) is a Strong Growth Stock

ServiceNow (NOW) is identified as a strong growth stock by Zacks, despite its #3 (Hold) Zacks Rank, primarily due to its top-tier 'A' Growth Style Score and 'B' VGM Score. The cloud-based workflow digitization provider is projected to achieve 18.8% year-over-year earnings growth for the current fiscal year, supported by recent upward revisions in fiscal 2025 earnings estimates to $16.53 per share and a historical average earnings surprise of 6.6%, making it a notable consideration for growth-focused investors.

Analysis

ServiceNow (NOW) exhibits strong growth characteristics despite its neutral Zacks #3 (Hold) rating. The company's primary appeal for growth-focused portfolios stems from its 'A' grade on the Zacks Growth Style Score, underpinned by a forecast for 18.8% year-over-year earnings growth in the current fiscal year. This positive outlook is further supported by a consistent history of beating expectations, reflected in an average earnings surprise of 6.6%. While forward-looking sentiment is positive, with the fiscal 2025 Zacks Consensus Estimate for EPS rising to $16.53, this revision was marginal ($0.03) and based on a single analyst update over the past 60 days. The company's deep entrenchment in the enterprise market, serving over 85% of the Fortune 500, provides a stable foundation for its growth narrative. The overall 'B' grade for the combined VGM score suggests a solid, but not exceptional, profile when value and momentum are also considered, aligning with the neutral overall rank.

Key Decisions for Investors

• Growth-oriented investors may consider ServiceNow's strong fundamentals, including its 18.8% projected earnings growth and dominant enterprise client base, as a basis for a long-term position.
• Investors should closely monitor upcoming earnings reports and analyst estimate revisions to see if a broader consensus forms around the positive outlook, as the recent upward revision was based on a single analyst.
• It is prudent to weigh the company's compelling growth metrics against its neutral Zacks #3 'Hold' rank, which suggests that factors such as valuation or near-term momentum may warrant a more cautious approach to entry timing.