Why ServiceNow, Inc. Shares Soared
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of IT infrastructure specialist ServiceNow, jumped 14% Thursday, after at least four analysts chimed in with positive notes on the stock following its latest quarterly earnings announcement.
So what: Fourth-quarter revenue rose 67% year-over-year to $125.2 million, which translated to an adjusted net loss of $3 million, or $0.02 per share. Analysts, on average, were expecting the company to report a quarterly net loss of just $0.01 per share, but on lower revenue of $120.25 million.
In the current quarter, ServiceNow expects revenue in the range of $133 million and $135 million, also well above expectations for $131 million. Better yet, ServiceNow projects full-year 2014 sales of $640 million to $645 million, compared to estimates for just $611 million.
The performance was good enough to spur positive notes from analysts at Raymond James, Canaccord Genuity, Robert W. Baird, and Susquehanna -- all of whom recommend buying the stock with price targets ranging from $70 to $75 per share.
Now what: To be sure, ServiceNow not only boasted a 96% subscription renewal rate in the most recent quarter -- indicating existing customers are more than happy with its value proposition -- but also continued to build the average value of those contracts with upsells representing a full 36% of their total annual contract value. What's more, ServiceNow tacked on another 549 customers in 2013, bringing its cumulative count to over 2,060, and achieved record billings of $166 million in the most recent quarter.
The stock may look pricey trading around 175 time next year's estimated earnings, but that's not entirely uncommon for companies quickly growing their top-lines en route to sustained long-term profitability. If ServiceNow can continue delivering on its growth promises, I think the stock could still prove a bargain for patient investors down the road.
Consider the 9 incredible high-yielding dividend stocks in this free report
ServiceNow may still reward investors as it marches toward profitability, but that doesn't mean there aren't other great options to put your money to work.
In fact, one of the dirty secrets that few finance professionals will openly admit is the fact that dividend stocks as a group handily outperform their non-dividend paying brethren. The reasons for this are too numerous to list here, but you can rest assured that it's true. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.
The article Why ServiceNow, Inc. Shares Soared originally appeared on Fool.com.
Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
