ServiceNow Inc. (NYSE:NOW)

The analysis of the financial ratios over multiple quarters reveals distinct trends in valuation metrics that reflect changing market perceptions and company performance.

Price to Earnings (P/E) Ratio

The P/E ratio demonstrates a substantial decline from an extremely high level of over 650 in early 2021, progressively decreasing to approximately 112 by the third quarter of 2025. This decrease suggests that earnings growth or market valuation adjustments have moderated over time. Notably, there was a sharp decline between the end of 2022 and the mid-2023 period where the ratio dropped from around 231 to near 71, indicating a significant improvement in earnings relative to price or a correction in the stock valuation. Subsequently, the ratio fluctuated but remained considerably lower than the early 2021 levels, indicating a more normalized earnings multiple.

Price to Operating Profit (P/OP) Ratio

The P/OP ratio followed a pattern similar to the P/E ratio with initially very high multiples above 400 in early 2021 and peaking close to 570 during mid-2021. This was followed by a consistent and marked reduction through 2023 and 2024, hitting levels near 110 by late 2025. The ratio’s decline indicates improvement in operating profitability or adjustments in valuation, suggesting that investors are paying less for each dollar of operating profit compared to previous years. Some variability in the mid-2023 to mid-2024 period shows the ratio hovering between 150 and 200, indicating some fluctuation in operating profitability expectations or share price adjustments.

Price to Sales (P/S) Ratio

The P/S ratio exhibited a less dramatic but clear trend of decline from over 20 in early 2021 to around 15 by late 2025, with some intermediate fluctuations. A notable dip occurred in 2022, decreasing from around 16 to a low near 12, followed by a rebound with a peak near 18 to 19 in 2024 before settling slightly lower again. This pattern reflects changes in market valuation relative to revenue, indicating periods where sales growth may have fluctuated or investor sentiment adjusted. Overall, the P/S ratio remains elevated, indicating sustained premium valuation on sales relative to typical market levels.

Price to Book Value (P/BV) Ratio

The P/BV ratio has decreased from a high above 30 in early 2021 to a range around 17 by the third quarter of 2025. This decline indicates a moderation in price relative to the company's net asset value. There are intermittent increases in 2023 and 2024 where the ratio temporarily rose toward 20-21, suggestive of improved market sentiment or asset base perceptions during those periods. The overall downward trend aligns with other valuation metrics showing a normalization from previously elevated levels.

In summary, all key valuation ratios have experienced significant declines from early 2021 high points through to late 2025, reflecting either earnings and operating profit growth outpacing price increases or adjustments in market valuation multiples. The less volatile P/S ratio indicates relatively steadier revenue expectations, while the P/E and P/OP ratios illustrate sharper shifts in profitability and investor sentiment. The P/BV ratio's moderate decrease aligns with a gradual revaluation of the company's net assets relative to market price. Collectively, these trends signal a transition from extremely high valuations toward more normalized levels over the observed period.

Share Price Trend

The share price exhibited notable fluctuations during the analyzed period. Initially, there was an upward trend from US$505 to a peak near US$687 in the third quarter of 2021. This was followed by a decline reaching a trough near US$415 in the third quarter of 2022. Subsequently, the share price recovered and grew steadily, surpassing US$1,000 by the end of the first quarter in 2025, despite some volatility in the interim quarters.

Earnings per Share (EPS) Development

EPS showed a general upward trajectory with some variability. The figure rose from US$0.77 in the first quarter of 2021 to a high of US$1.6 by the end of 2021. After a slight dip mid-2022, EPS surged sharply in 2023, reaching 9.4 by early 2024. In the subsequent periods, EPS stabilized somewhat, fluctuating between approximately US$5.56 and US$8.32, with an overall upward trend continuing until early 2025.

Price-to-Earnings (P/E) Ratio Movement

The P/E ratio followed a declining pattern in the first half of the timeline, dropping from an exceptionally high value above 650 in early 2021 to below 300 by the end of 2021, indicating growing earnings relative to share price. The ratio continued to decrease sharply, reaching a low near 70 in mid-2023, coinciding with the EPS increase and a share price recovery. However, from late 2023 to early 2025, the P/E ratio increased again, fluctuating mostly between 110 and 150, suggesting some revaluation of the share price relative to earnings during this period.

Insights and Summary

Over the course of the observed intervals, the company’s earnings improved significantly, driving a considerable reduction in the P/E ratio during the middle periods, which implies enhanced profitability and possibly improved market valuation standards. The share price experienced marked volatility but demonstrated strong recovery and growth by the end of the period. The uptick in the P/E ratio towards the later periods suggests the market might be reappraising the stock's future growth prospects or adjusting expectations relative to earnings increases. Overall, the financial metrics reflect a company undergoing positive earnings growth with fluctuating but ultimately upward stock valuation trends.

Share Price Trends

The share price exhibited significant fluctuations over the analyzed quarters. Initially, it showed an upward trajectory from $505 in March 2021, reaching a peak near $687 by September 2021, followed by a decline to around $415 by September 2022. Subsequently, the share price experienced a period of recovery and growth, attaining a high of $1,012.75 in June 2025 before slightly retreating to $934.68 by September 2025. This pattern indicates volatility with phases of both decline and robust appreciation.

Operating Profit Per Share

Operating profit per share demonstrated a steady and consistent increase throughout the period under review. Starting at $1.25 in March 2021, it reached $1.75 by December 2021, then continued to grow markedly to $8.44 by September 2025. The trend reflects improving operational profitability on a per-share basis, indicating enhanced earnings capacity and potentially better cost management or revenue growth.

Price to Operating Profit (P/OP) Ratio

The P/OP ratio showed an overall downward trend across the period, signifying that the share price grew at a slower pace than the growth in operating profit per share. Beginning at a high ratio of approximately 570 in September 2021, the ratio declined steadily to around 110 by September 2025. This decrease suggests that the stock became more attractively valued in terms of operating profit, and investors may perceive lower relative valuation multiples as profitability improved.

Summary Insights

The data suggests a company experiencing strong operational performance gains, as reflected in the continuous growth of operating profit per share. While the share price exhibited volatility, the long-term trend points to appreciation, particularly after mid-2022. The declining P/OP ratio reflects a valuation adjustment likely driven by the significant improvements in profitability, making the stock potentially more appealing from a value perspective. Overall, the financial metrics denote a positive outlook with strengthening fundamentals and evolving market valuation dynamics.

Share Price Trend

The share price exhibited considerable volatility over the observed periods. Initially, it increased sharply from $505 to a peak near $687 in late 2021, followed by a notable decline throughout 2022, reaching approximately $415 in September 2022. Subsequently, the price recovered substantially in 2023 and early 2024, culminating in a peak above $1,000 by December 2024. However, this was followed by another correction in 2025, with prices stabilizing around the $900 range.

Sales per Share Trend

Sales per share demonstrated a steady and consistent upward trajectory, increasing from $24.48 in early 2021 to about $60.90 by the first quarter of 2025. This reflects continuous growth in revenue generation on a per-share basis without notable downturns, indicating solid operational performance over time.

Price-to-Sales Ratio (P/S) Trend

The P/S ratio showed significant fluctuations, reflecting changing investor sentiment and valuation multiples. It started high at over 20 in early 2021 and remained elevated into late 2021, before declining sharply through 2022 to levels near 12. Afterward, the ratio increased again in 2023 and 2024, peaking close to 19, suggesting heightened market valuations relative to sales. The measure then eased somewhat in 2025, settling around 15, indicating a moderation in price relative to sales growth.

Overall Analysis

The data suggests the company has achieved steady sales growth, as evidenced by the ascending sales per share. However, the share price and valuation multiples were highly sensitive to market dynamics, with periods of volatility and investor reassessment. The rise in share price and P/S ratio in 2023 and 2024 may reflect increased optimism or improved market conditions, while the subsequent cooling in 2025 suggests a return to more moderate valuations. The divergence between the steady sales growth and fluctuating market valuation highlights the impact of external factors beyond fundamental sales performance.

The share price exhibited notable fluctuations over the analyzed periods, with an initial increase from 505 US$ to a peak above 687 US$ in late 2021, followed by a decline below 416 US$ during the third quarter of 2022. Subsequently, the price recovered and reached a new high exceeding 1,000 US$ by early 2025, demonstrating substantial volatility but an overall upward trend as it approached the end of the period.

Book value per share (BVPS) showed a consistent and steady increase throughout the reported quarters, rising from 15.39 US$ at the beginning of 2021 to over 54 US$ by the first quarter of 2025. This steady growth in BVPS indicates continuous accretion of the company’s net asset value on a per-share basis without any observed reversals or declines.

The price-to-book value (P/BV) ratio trended downward initially, falling from a very high level above 38 in the third quarter of 2021 to a low approximately around 15.7 by the third quarter of 2023. This decline reflects a relative reduction in share price compared to the growth in book value. Following this low point, the P/BV ratio showed some volatility with increases peaking around 21.7 in late 2024, before retreating again towards approximately 17 by the middle of 2025. The declining P/BV ratio over most of the period along with the subsequent fluctuations suggests varying investor sentiment concerning the valuation in relation to the company’s book value, influenced by share price movements and strong book value growth.

In summary, the data reveals a company with steadily improving underlying book value, while the market valuation (as indicated by share price and P/BV ratio) experienced significant volatility, including periods of both premium and relative discount compared to the company’s book value per share. The overall long-term trend in share price is positive, culminating in record highs, whereas the P/BV metric suggests changing investor perceptions of value throughout the analyzed timeframe.