ServiceNow Inc (NOW) Valuation

Based on the GoodMoat Investment Framework, the primary valuation tool is a Discounted Cash Flow model. The GoodMoat Target of $155.02 suggests an intrinsic value significantly above the current price of $103.06. This implies a margin of safety of approximately 33.5%, which falls into the 'Favourable' band (20–40%) per the framework's classification. This discount provides a cushion for a value investor. However, the stock's forward P/E of 61.3x is very high, both in absolute terms and relative to its 20.7% revenue growth. While the framework notes a P/E of 25-26x can be reasonable for a 50% grower, ServiceNow's multiple is elevated for its growth rate, suggesting the market is pricing in high future expectations. The 4.3% Free Cash Flow Yield is a positive indicator, translating to a P/FCF of about 23x, which is more reasonable. For a high-quality SaaS company, investors must weigh the favourable DCF margin of safety against the premium earnings multiple and assess whether the company's durable moat and growth trajectory justify the price. The valuation is not cheap on a P/E basis, but the DCF suggests underlying value.