Investors in ServiceNow (NYSE:NOW) have made a fantastic return of 741% over the past five years
Long term investing can be life changing when you buy and hold the truly great businesses. While the best companies are hard to find, but they can generate massive returns over long periods. To wit, the ServiceNow, Inc. (NYSE:NOW) share price has soared 741% over five years. This just goes to show the value creation that some businesses can achieve. It's also good to see the share price up 26% over the last quarter. Anyone who held for that rewarding ride would probably be keen to talk about it.
Now it's worth having a look at the company's fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.
View our latest analysis for ServiceNow
Given that ServiceNow only made minimal earnings in the last twelve months, we'll focus on revenue to gauge its business development. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. It would be hard to believe in a more profitable future without growing revenues.
For the last half decade, ServiceNow can boast revenue growth at a rate of 28% per year. That's well above most pre-profit companies. Arguably, this is well and truly reflected in the strong share price gain of 53%(per year) over the same period. It's never too late to start following a top notch stock like ServiceNow, since some long term winners go on winning for decades. On the face of it, this looks lke a good opportunity, although we note sentiment seems very positive already.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
ServiceNow is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So we recommend checking out this free report showing consensus forecasts
A Different Perspective
It's good to see that ServiceNow has rewarded shareholders with a total shareholder return of 40% in the last twelve months. However, the TSR over five years, coming in at 53% per year, is even more impressive. It's always interesting to track share price performance over the longer term. But to understand ServiceNow better, we need to consider many other factors. Case in point: We've spotted 5 warning signs for ServiceNow you should be aware of.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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