ServiceNow Inc. (NYSE:NOW)

The valuation ratios exhibited considerable fluctuation throughout the observed period, spanning from March 31, 2022, to December 31, 2025. A general trend towards decreasing valuations is apparent in the later periods, particularly noticeable in the final quarters of 2025. Initial values were substantially higher, followed by a period of decline and stabilization, then a renewed decrease towards the end of the timeframe.

Price to Earnings (P/E) Ratio

The Price to Earnings ratio demonstrated a significant decrease over the period. Starting at 452.02, it experienced a substantial drop, reaching a low of 69.85 by December 31, 2025. The most dramatic declines occurred between March 31, 2022, and December 31, 2022, and again between March 31, 2023, and December 31, 2025. There were periods of relative stability, such as between September 30, 2023, and March 31, 2024, but the overall trajectory is downward.

Price to Operating Profit (P/OP) Ratio

The Price to Operating Profit ratio followed a similar pattern to the P/E ratio, though the magnitude of change was less extreme. It began at 408.10 and decreased to 66.94 by the end of the period. The largest decrease was observed between March 31, 2022, and December 31, 2022, with a further decline occurring throughout 2023 and 2024, culminating in a more pronounced drop in the final quarter of 2025. The ratio exhibited less volatility than the P/E ratio.

Price to Sales (P/S) Ratio

The Price to Sales ratio showed initial decline from 16.11 to 12.13, followed by a period of fluctuation. It increased to 18.83 by September 30, 2024, before decreasing significantly to 9.20 by December 31, 2025. This ratio demonstrated more variability than P/E or P/OP, with multiple peaks and troughs throughout the period. The final decline mirrors the trend observed in the other ratios.

Price to Book Value (P/BV) Ratio

The Price to Book Value ratio also exhibited a downward trend, although less pronounced than the P/E and P/OP ratios. Starting at 25.22, it decreased to 9.42 by December 31, 2025. The decline was relatively steady, with a more significant drop occurring between September 30, 2023, and December 31, 2025. The ratio remained comparatively stable between June 30, 2023, and September 30, 2024.

Collectively, the ratios suggest a decreasing market valuation relative to earnings, operating profit, sales, and book value over the analyzed period. The most substantial declines occurred in the latter half of the timeframe, indicating a potential shift in investor sentiment or underlying business performance. The consistency of this trend across multiple valuation metrics suggests it is not an isolated phenomenon.

The Price to Earnings (P/E) ratio exhibited significant fluctuations throughout the observed period, spanning from March 31, 2022, to December 31, 2025. Initially, the ratio demonstrated very high values, followed by a substantial decline and subsequent stabilization before experiencing another period of volatility.

Initial High Valuation (Mar 31, 2022 – Dec 31, 2022)

From March 31, 2022, through December 31, 2022, the P/E ratio began at 452.02 and fluctuated between 284.29 and 479.20. This indicates a period of exceptionally high valuation relative to earnings. The ratio decreased over this period, but remained at elevated levels.

Significant Decline (Mar 31, 2023 – Sep 30, 2023)

A marked decrease in the P/E ratio was observed from March 31, 2023, to September 30, 2023, falling from 231.72 to 71.21. This decline coincided with a substantial increase in Earnings Per Share (EPS), suggesting that the market price did not increase at the same rate as earnings, or that expectations for future earnings growth were revised downward.

Stabilization and Subsequent Increase (Dec 31, 2023 – Sep 30, 2024)

Following the decline, the P/E ratio stabilized, ranging between 77.25 and 148.98 from December 31, 2023, to September 30, 2024. This period suggests a more consistent valuation. A subsequent increase was noted, peaking at 191.32 by September 30, 2024, indicating renewed investor optimism or a potential overvaluation.

Recent Volatility and Decline (Dec 31, 2024 – Dec 31, 2025)

The final period, from December 31, 2024, to December 31, 2025, demonstrated considerable volatility. The P/E ratio decreased from 202.55 to 69.85. This recent decline, despite relatively stable EPS, suggests a potential correction in the market’s valuation or a shift in investor sentiment. The ratio ended the period at its lowest point, 69.85.

Overall, the P/E ratio experienced a dynamic period, transitioning from extremely high levels to a more moderate range, followed by renewed volatility and a concluding decline. The fluctuations suggest sensitivity to changes in both share price and earnings, and potentially, broader market conditions or company-specific expectations.

The Price to Operating Profit (P/OP) ratio exhibited considerable fluctuation over the observed period, spanning from March 31, 2022, to December 31, 2025. Initially, the ratio presented at elevated levels, subsequently declining and stabilizing before experiencing renewed volatility.

Initial High Valuation (Mar 31, 2022 – Jun 30, 2022)

The P/OP ratio commenced at 408.10 and remained high at 404.46, indicating a substantial premium investors were willing to pay for each dollar of operating profit. This suggests strong growth expectations or a perceived competitive advantage during this period.

Decline and Stabilization (Sep 30, 2022 – Dec 31, 2022)

A noticeable downward trend emerged, with the P/OP ratio decreasing to 206.26 by December 31, 2022. This decline may reflect a reassessment of growth prospects or broader market conditions. The ratio demonstrated some stabilization in the latter half of 2022.

Further Reduction and Fluctuations (Mar 31, 2023 – Dec 31, 2024)

The ratio continued to decrease, reaching a low of 152.95 by December 31, 2024. While fluctuations were present, the overall trend indicated a diminishing valuation relative to operating profit. The ratio remained relatively stable between 156.40 and 159.12 during the first half of 2024.

Significant Decline (Mar 31, 2025 – Dec 31, 2025)

A substantial decrease in the P/OP ratio was observed in the final quarters of the analyzed period, falling to 66.94 by December 31, 2025. This represents a significant contraction in valuation, potentially driven by factors such as decreased investor confidence, lower growth forecasts, or increased risk perception. The ratio decreased from 113.44 in March 2025 to 66.94 in December 2025.

Concurrently, operating profit per share generally increased throughout the period, from 0.25 in March 2022 to 1.74 in December 2025. However, the decline in the P/OP ratio suggests that the market’s valuation of each dollar of operating profit decreased at a faster rate than the increase in operating profit per share.

The observed trends indicate a shift in investor sentiment regarding the company’s valuation, moving from a high premium to a considerably lower multiple of operating profit. Further investigation would be required to determine the underlying causes of these changes.

The Price to Sales (P/S) ratio exhibited considerable fluctuation over the observed period, spanning from March 31, 2022, to December 31, 2025. Initially, the ratio demonstrated a declining trend, followed by periods of increase and subsequent decline, culminating in a significant decrease at the end of the period.

Initial Decline (Mar 31, 2022 – Jun 30, 2022)

The P/S ratio decreased from 16.11 to 13.36, indicating a potential shift in investor sentiment or a relative increase in sales compared to the share price during this timeframe. This initial decline suggests the market was potentially reassessing the company’s valuation relative to its revenue generation.

Stabilization and Subsequent Increase (Sep 30, 2022 – Dec 31, 2022)

Following the initial decline, the ratio stabilized and then increased to 17.52 by December 31, 2022. This suggests a renewed positive market outlook or a decrease in sales relative to the share price. The increase indicates investors were willing to pay more for each dollar of sales.

Fluctuation and Peak (Mar 31, 2023 – Dec 31, 2023)

The P/S ratio continued to fluctuate, reaching a peak of 18.99 in December 2023. This period demonstrates a sustained high valuation relative to sales, potentially driven by strong growth expectations or market enthusiasm. The ratio experienced increases from 14.25 to 18.99.

Recent Decline (Mar 31, 2024 – Dec 31, 2025)

A notable decline in the P/S ratio is observed from March 31, 2024 (14.67) to December 31, 2025 (9.20). This represents a substantial decrease in the valuation investors are assigning to each dollar of sales. This could be attributed to factors such as slowing sales growth, increased competition, or broader market corrections. The final value represents the lowest point in the observed period.

Throughout the period, the P/S ratio generally remained above 12, suggesting a premium valuation relative to sales. However, the recent downward trend warrants further investigation to determine the underlying causes and potential implications for future performance. The ratio’s sensitivity to market conditions and company-specific factors is evident in its fluctuating pattern.

The observed changes in the P/S ratio correlate with movements in both the share price and sales per share. Periods of increasing share price, coupled with relatively stable or slower-growing sales per share, generally resulted in higher P/S ratios. Conversely, periods of declining share price or faster-growing sales per share tended to lower the ratio.

The price-to-book value (P/BV) ratio exhibited a generally decreasing trend over the observed period, punctuated by periods of stability and a significant decline towards the end of the timeframe. Initially, the ratio decreased from 25.22 to 18.36 between March 31, 2022, and December 31, 2022. This decline suggests a decreasing premium investors were willing to pay for each dollar of net asset value during that period.

Initial Decline & Stabilization (Q1 2022 - Q4 2022)

The P/BV ratio began at 25.22 in March 2022 and experienced a consistent decline through the end of the year, reaching 18.36. This suggests a potential shift in investor sentiment or a reassessment of the company’s asset valuation relative to its market price. The rate of decline slowed in the latter half of the year.

From early 2023 through September 2023, the P/BV ratio remained relatively stable, fluctuating between 16.49 and 15.73. This period indicates a consolidation of investor expectations regarding the relationship between market price and book value. However, a subsequent increase was observed in December 2023, reaching 20.60, potentially driven by positive market reactions to company performance or future outlook.

Fluctuation & Subsequent Decline (Q1 2023 - Q4 2025)

Following the stabilization, the ratio experienced moderate fluctuations, peaking at 21.71 in December 2024. This was followed by a substantial decrease to 9.42 by December 2025. This sharp decline indicates a significant shift in market perception, potentially reflecting concerns about the company’s future profitability or a re-evaluation of its asset base. The decrease coincides with a substantial increase in book value per share.

Book value per share consistently increased throughout the period, rising from US$4.00 in March 2022 to US$12.39 in December 2025. This growth in book value did not prevent the overall decline in the P/BV ratio, particularly in the latter part of the observed timeframe, suggesting that market price did not keep pace with the increasing net asset value. The divergence between share price and book value growth is most pronounced in the final quarters.

Book Value Growth

The consistent increase in book value per share suggests underlying growth in the company’s net asset base. However, the decreasing P/BV ratio indicates that this growth was not fully reflected in the market valuation, especially towards the end of the period. This could be due to various factors, including changing market conditions, investor sentiment, or concerns about the company’s ability to generate returns on its assets.

In summary, the P/BV ratio demonstrated an overall downward trend, despite consistent growth in book value per share. The final period shows a particularly dramatic decrease in the ratio, suggesting a significant shift in investor valuation of the company’s net assets.