Revenue minus cost of goods sold. Graham's ≥40% threshold identifies businesses with durable pricing power. Note: software and financial companies naturally exceed this; retailers and manufacturers rarely reach it due to their cost structures.
Operating Margin13.7%
Profit after operating costs before interest and taxes. A consistent ≥15% operating margin signals a business with real competitive advantages. Capital-intensive industries (airlines, auto, commodities) rarely hit this threshold due to their structural cost base — compare within industry for context.
Net Income Margin13.2%
Bottom-line profit as a percentage of revenue. The ≥20% target reflects Buffett's preference for highly profitable businesses. Financial engineering (buybacks, tax optimisation) can inflate this temporarily — look for consistency across multiple years rather than a single strong result.
Financial Health
C
Years to Pay Off Debt1.4 yrs
Total Debt ÷ Net Income. Lower = stronger balance sheet. Important caveat: utilities, telecoms, REITs, and infrastructure companies carry large structural debt by design — their bond-like cash flows service it comfortably at ratios that would alarm Graham. Compare within sector.
Working Capital vs Long-Term Debt-$1.5B
Working Capital minus Long-Term Debt. Negative results are common and expected in capital-return-focused businesses like Apple, Domino's, and McDonald's — where aggressive buybacks and dividends intentionally reduce book equity. This does not indicate financial distress in high-FCF businesses.
Working Capital$28M
Current Assets minus Current Liabilities. Negative working capital can be a deliberate efficiency strategy in businesses that collect cash before paying suppliers (retailers, fast food franchises, subscription businesses). Assess alongside free cash flow generation for full context.
Valuation
F
Margin of Safety0.0%
How far below the Graham Number the stock trades. Graham required a 33% discount as a buffer against analytical error. However, the Graham Number itself assumes 1960s-era P/E and P/B norms — for modern asset-light businesses it often understates true intrinsic value, making 0% MoS appear misleadingly bad.
Price-to-Book9.19x
Market price vs book value per share. Rarely below 1.5x for quality businesses today. Intangible assets (brand, software, patents) don't appear on the balance sheet under accounting rules, making P/B artificially high for asset-light companies like software and consumer brands.
Cash Flow
C
Free Cash Flow$4.5B
Operating cash flow minus capital expenditures. Buffett's most important metric — cash a business actually generates for its owners after maintaining and growing its asset base. Consistently positive FCF is one of the strongest indicators of a durable, well-run business regardless of accounting profits.
CapEx % of Net Income52.1%
Capital expenditure as a share of net income. Low CapEx signals a capital-light business that doesn't need heavy reinvestment to sustain earnings — Buffett's ideal. High CapEx is structurally necessary in manufacturing, airlines, telecoms, and semiconductors. For these industries, a high reading reflects the business model, not poor management.
Owner Earnings$3.4B
Net Income + Depreciation & Amortisation − Capital Expenditures. Buffett's preferred measure of a company's true annual earning power — what could theoretically be distributed to owners without impairing the business. More reliable than reported EPS because it accounts for the capital cost of maintaining the business.
About ServiceNow, Inc.
ServiceNow, Inc. provides cloud-based solution for digital workflows in the North America, Europe, the Middle East and Africa, Asia Pacific, and internationally. The company provides asset management, integrated risk management, IT service management, Operational Technology management, Security Operations, strategic portfolio management, IT operations management products; customer service management product; field service management applications; and sales and order management services. It also offers human resources delivery; legal and contract operations; workplace service delivery products; app engine product; automation engine; platform privacy and security product; and source-to-pay operations. In addition, the company provides RaptorDB, a database built to manage workloads at scale; ServiceNow Impact that provides customers with software tools, guided plans, and AI-driven recommendations; customer support; and workflow data fabric. It serves government, financial services, healthcare and life science, manufacturing, Public Sector, retail, technology, and Telecom sectors through service providers and resale partners. The company has a strategic collaboration with Cohesity, Inc. to develop, operate, and safeguard autonomous AI agents and data with enterprise-grade reliability; and with ServiceNow to Advance Ai-Powered Solution for Mission-Critical Infrastructure Monitoring. The company was formerly known as Service-now.com and changed its name to ServiceNow, Inc. in May 2012. ServiceNow, Inc. has a strategic alliance with Accenture for integrated risk management and third-party risk management solutions. ServiceNow, Inc. was founded in 2004 and is headquartered in Santa Clara, California.
ServiceNow, Inc. provides cloud-based solution for digital workflows in the North America, Europe, the Middle East and Africa, Asia Pacific, and internationally. The company provides asset management, integrated risk management, IT service management, Operational Technology management, Security Operations, strategic portfolio management, IT operations management products; customer service management product; field service management applications; and sales and order management services. It also offers human resources delivery; legal and contract operations; workplace service delivery products; app engine product; automation engine; platform privacy and security product; and source-to-pay operations. In addition, the company provides RaptorDB, a database built to manage workloads at scale; ServiceNow Impact that provides customers with software tools, guided plans, and AI-driven recommendations; customer support; and workflow data fabric. It serves government, financial services, healthcare and life science, manufacturing, Public Sector, retail, technology, and Telecom sectors through service providers and resale partners. The company has a strategic collaboration with Cohesity, Inc. to develop, operate, and safeguard autonomous AI agents and data with enterprise-grade reliability; and with ServiceNow to Advance Ai-Powered Solution for Mission-Critical Infrastructure Monitoring. The company was formerly known as Service-now.com and changed its name to ServiceNow, Inc. in May 2012. ServiceNow, Inc. has a strategic alliance with Accenture for integrated risk management and third-party risk management solutions. ServiceNow, Inc. was founded in 2004 and is headquartered in Santa Clara, California.
Metric Explanations
What each dimension measures and where the thresholds come from.
Gross Profit Margin
Revenue minus cost of goods sold. Graham's ≥40% threshold identifies businesses with durable pricing power. Note: software and financial companies naturally exceed this; retailers and manufacturers rarely reach it due to their cost structures.
Operating Margin
Profit after operating costs before interest and taxes. A consistent ≥15% operating margin signals a business with real competitive advantages. Capital-intensive industries (airlines, auto, commodities) rarely hit this threshold due to their structural cost base — compare within industry for context.
Net Income Margin
Bottom-line profit as a percentage of revenue. The ≥20% target reflects Buffett's preference for highly profitable businesses. Financial engineering (buybacks, tax optimisation) can inflate this temporarily — look for consistency across multiple years rather than a single strong result.
Years to Pay Off Debt
Total Debt ÷ Net Income. Lower = stronger balance sheet. Important caveat: utilities, telecoms, REITs, and infrastructure companies carry large structural debt by design — their bond-like cash flows service it comfortably at ratios that would alarm Graham. Compare within sector.
Working Capital vs Long-Term Debt
Working Capital minus Long-Term Debt. Negative results are common and expected in capital-return-focused businesses like Apple, Domino's, and McDonald's — where aggressive buybacks and dividends intentionally reduce book equity. This does not indicate financial distress in high-FCF businesses.
Working Capital
Current Assets minus Current Liabilities. Negative working capital can be a deliberate efficiency strategy in businesses that collect cash before paying suppliers (retailers, fast food franchises, subscription businesses). Assess alongside free cash flow generation for full context.
Margin of Safety
How far below the Graham Number the stock trades. Graham required a 33% discount as a buffer against analytical error. However, the Graham Number itself assumes 1960s-era P/E and P/B norms — for modern asset-light businesses it often understates true intrinsic value, making 0% MoS appear misleadingly bad.
Price-to-Book
Market price vs book value per share. Rarely below 1.5x for quality businesses today. Intangible assets (brand, software, patents) don't appear on the balance sheet under accounting rules, making P/B artificially high for asset-light companies like software and consumer brands.
Free Cash Flow
Operating cash flow minus capital expenditures. Buffett's most important metric — cash a business actually generates for its owners after maintaining and growing its asset base. Consistently positive FCF is one of the strongest indicators of a durable, well-run business regardless of accounting profits.
CapEx % of Net Income
Capital expenditure as a share of net income. Low CapEx signals a capital-light business that doesn't need heavy reinvestment to sustain earnings — Buffett's ideal. High CapEx is structurally necessary in manufacturing, airlines, telecoms, and semiconductors. For these industries, a high reading reflects the business model, not poor management.
Owner Earnings
Net Income + Depreciation & Amortisation − Capital Expenditures. Buffett's preferred measure of a company's true annual earning power — what could theoretically be distributed to owners without impairing the business. More reliable than reported EPS because it accounts for the capital cost of maintaining the business.
Mr. Market is currently offering ServiceNow, Inc. at $115.26.
The business passes only 3 of 7 of Graham's defensive criteria — well below his required standard.
At $115.26, the stock trades at a 431% premium to its Graham Number of $21.71. Graham would consider this price speculative.
There is no margin of safety at the current price. Graham would advise patience and waiting for a better entry point.
Negative NCAV — liabilities exceed current assets. Common in capital-return businesses (buybacks, debt-funded dividends) and capital-intensive industries. Not automatically a warning sign..
Conclusion: By Graham's standards, this stock is speculative at its current price. The intelligent investor would look elsewhere or wait.
Showing Key Metrics
Income Highlights
Metric
2025
2024
2023
2022
2021
Gross Profit %
77.5%▼
79.2%▲
78.6%▲
78.3%•
N/A
Operating Margin %
13.7%▲
12.4%▲
8.5%▲
4.9%•
N/A
Net Income %
13.2%▲
13.0%▼
19.3%▲
4.5%•
N/A
Diluted EPS
1.67▲
1.37▼
1.68▲
0.32•
N/A
Balance Sheet Highlights
Metric
2025
2024
2023
2022
2021
Total Assets
$26.0B
$20.4B
$17.4B
$13.3B
N/A
Total Debt
$2.4B▲
$2.3B▼
$2.3B▲
$2.2B•
N/A
Working Capital
$28M▼
$829M▲
$412M▼
$649M•
N/A
Years to Pay Debt
1.37
1.60
1.32
6.87
N/A
Cash Flow Highlights
Metric
2025
2024
2023
2022
2021
Free Cash Flow
$4.5B▲
$3.4B▲
$2.7B▲
$2.2B•
N/A
Owner Earnings
$3.4B
$2.9B
$3.0B
$1.3B
N/A
CapEx % of Net Income
52.1%
62.6%
40.3%
169.2%
N/A
Income Statement
2025
2024
2023
2022
2021
Tax Rate For Calcs
0
0
0
0
Normalized EBITDA
3,022,000
2,325,000
1,324,000
788,000
Total Unusual Items
-3,000
Total Unusual Items Excluding Goodwill
-3,000
Net Income From Continuing Operation Net Minority Interest
1,748,000
1,425,000
1,731,000
325,000
Reconciled Depreciation
738,000
564,000
562,000
433,000
Reconciled Cost Of Revenue
2,983,000
2,287,000
1,921,000
1,573,000
EBITDA
3,022,000
2,325,000
1,324,000
788,000
EBIT
2,284,000
1,761,000
762,000
355,000
Net Interest Income
428,000
396,000
302,000
82,000
Interest Expense
23,000
23,000
24,000
27,000
Interest Income
451,000
419,000
302,000
82,000
Normalized Income
1,748,000
1,425,000
1,731,000
325,000
Net Income From Continuing And Discontinued Operation
1,748,000
1,425,000
1,731,000
325,000
Total Expenses
11,454,000
9,620,000
8,209,000
6,890,000
Total Operating Income As Reported
1,824,000
1,364,000
762,000
355,000
Diluted Average Shares
1,046,691
1,040,000
1,030,000
1,020,000
Basic Average Shares
1,036,740
1,030,000
1,020,000
1,005,000
Diluted EPS
0
0
0
0
Basic EPS
0
0
0
0
Diluted NI Availto Com Stockholders
1,748,000
1,425,000
1,731,000
325,000
Net Income Common Stockholders
1,748,000
1,425,000
1,731,000
325,000
Net Income
1,748,000
1,425,000
1,731,000
325,000
Net Income Including Noncontrolling Interests
1,748,000
1,425,000
1,731,000
325,000
Net Income Continuous Operations
1,748,000
1,425,000
1,731,000
325,000
Tax Provision
513,000
313,000
-723,000
74,000
Pretax Income
2,261,000
1,738,000
1,008,000
399,000
Other Income Expense
9,000
-22,000
-56,000
-38,000
Other Non Operating Income Expenses
9,000
-22,000
-56,000
-38,000
Special Income Charges
-3,000
Other Special Charges
3,000
Net Non Operating Interest Income Expense
428,000
396,000
302,000
82,000
Interest Expense Non Operating
23,000
23,000
24,000
27,000
Interest Income Non Operating
451,000
419,000
302,000
82,000
Operating Income
1,824,000
1,364,000
762,000
355,000
Operating Expense
8,471,000
7,333,000
6,288,000
5,317,000
Research And Development
2,960,000
2,543,000
2,124,000
1,768,000
Selling General And Administration
5,511,000
4,790,000
4,164,000
3,549,000
Selling And Marketing Expense
4,388,000
3,854,000
3,301,000
2,814,000
General And Administrative Expense
1,123,000
936,000
863,000
735,000
Other Gand A
1,123,000
936,000
863,000
735,000
Gross Profit
10,295,000
8,697,000
7,050,000
5,672,000
Cost Of Revenue
2,983,000
2,287,000
1,921,000
1,573,000
Total Revenue
13,278,000
10,984,000
8,971,000
7,245,000
Operating Revenue
13,278,000
10,984,000
8,971,000
7,245,000
Balance Sheet
2025
2024
2023
2022
2021
Treasury Shares Number
18,498
8,320
4,475
Ordinary Shares Number
1,047,278
1,032,435
1,023,620
1,014,410
Share Issued
1,065,776
1,040,755
1,028,095
1,014,410
Net Debt
16,000
Total Debt
2,403,000
2,278,000
2,284,000
2,232,000
Tangible Book Value
8,265,000
8,127,000
6,173,000
3,976,000
Invested Capital
14,455,000
11,098,000
9,116,000
6,518,000
Working Capital
28,000
829,000
412,000
649,000
Net Tangible Assets
8,265,000
8,127,000
6,173,000
3,976,000
Capital Lease Obligations
912,000
789,000
796,000
746,000
Common Stock Equity
12,964,000
9,609,000
7,628,000
5,032,000
Total Capitalization
14,455,000
11,098,000
9,116,000
6,518,000
Total Equity Gross Minority Interest
12,964,000
9,609,000
7,628,000
5,032,000
Stockholders Equity
12,964,000
9,609,000
7,628,000
5,032,000
Gains Losses Not Affecting Retained Earnings
19,000
-68,000
-37,000
-102,000
Other Equity Adjustments
19,000
-68,000
-37,000
-102,000
Treasury Stock
3,045,000
1,219,000
535,000
0
Retained Earnings
5,242,000
3,494,000
2,069,000
338,000
Additional Paid In Capital
10,747,000
7,401,000
6,131,000
4,796,000
Capital Stock
1,000
1,000
0
0
Common Stock
1,000
1,000
0
0
Total Liabilities Net Minority Interest
13,074,000
10,774,000
9,759,000
8,267,000
Total Non Current Liabilities Net Minority Interest
2,631,000
2,416,000
2,394,000
2,262,000
Other Non Current Liabilities
220,000
145,000
118,000
56,000
Non Current Deferred Liabilities
120,000
95,000
81,000
70,000
Non Current Deferred Revenue
120,000
95,000
81,000
70,000
Long Term Debt And Capital Lease Obligation
2,291,000
2,176,000
2,195,000
2,136,000
Long Term Capital Lease Obligation
800,000
687,000
707,000
650,000
Long Term Debt
1,491,000
1,489,000
1,488,000
1,486,000
Current Liabilities
10,443,000
8,358,000
7,365,000
6,005,000
Other Current Liabilities
571,000
311,000
425,000
226,000
Current Deferred Liabilities
8,314,000
6,819,000
5,785,000
4,660,000
Current Deferred Revenue
8,314,000
6,819,000
5,785,000
4,660,000
Current Debt And Capital Lease Obligation
112,000
102,000
89,000
96,000
Current Capital Lease Obligation
112,000
102,000
89,000
96,000
Current Debt
92,000
Current Notes Payable
0
92,000
Pensionand Other Post Retirement Benefit Plans Current
220,000
196,000
167,000
150,000
Payables And Accrued Expenses
1,226,000
930,000
899,000
873,000
Current Accrued Expenses
827,000
700,000
650,000
490,000
Payables
399,000
230,000
249,000
383,000
Total Tax Payable
195,000
162,000
123,000
109,000
Accounts Payable
204,000
68,000
126,000
274,000
Total Assets
26,038,000
20,383,000
17,387,000
13,299,000
Total Non Current Assets
15,567,000
11,196,000
9,610,000
6,645,000
Other Non Current Assets
290,000
291,000
452,000
359,000
Non Current Deferred Assets
2,170,000
2,384,000
2,427,000
1,378,000
Non Current Deferred Taxes Assets
1,056,000
1,385,000
1,508,000
636,000
Investments And Advances
5,313,000
4,583,000
3,203,000
2,117,000
Other Investments
1,542,000
472,000
Investmentin Financial Assets
3,771,000
4,111,000
3,203,000
2,117,000
Available For Sale Securities
3,771,000
4,111,000
3,203,000
2,117,000
Long Term Equity Investment
1,542,000
472,000
Goodwill And Other Intangible Assets
4,699,000
1,482,000
1,455,000
1,056,000
Other Intangible Assets
1,121,000
209,000
224,000
232,000
Goodwill
3,578,000
1,273,000
1,231,000
824,000
Net PPE
3,095,000
2,456,000
2,073,000
1,735,000
Accumulated Depreciation
-1,836,000
-1,508,000
-1,285,000
-995,000
Gross PPE
4,931,000
3,964,000
3,358,000
2,730,000
Leases
433,000
320,000
292,000
226,000
Construction In Progress
117,000
63,000
33,000
53,000
Other Properties
806,000
693,000
715,000
682,000
Machinery Furniture Equipment
3,575,000
2,888,000
2,318,000
1,769,000
Current Assets
10,471,000
9,187,000
7,777,000
6,654,000
Other Current Assets
970,000
668,000
403,000
280,000
Current Deferred Assets
590,000
517,000
461,000
369,000
Prepaid Assets
223,000
Receivables
2,627,000
2,240,000
2,036,000
1,725,000
Accounts Receivable
2,627,000
2,240,000
2,036,000
1,725,000
Cash Cash Equivalents And Short Term Investments
6,284,000
5,762,000
4,877,000
4,280,000
Other Short Term Investments
2,558,000
3,458,000
2,980,000
2,810,000
Cash And Cash Equivalents
3,726,000
2,304,000
1,897,000
1,470,000
Cash Flow
2025
2024
2023
2022
2021
Free Cash Flow
4,533,000
3,375,000
2,701,000
2,173,000
Repurchase Of Capital Stock
-1,840,000
-696,000
-538,000
0
Repayment Of Debt
0
0
-94,000
-61,000
Capital Expenditure
-911,000
-892,000
-697,000
-550,000
Interest Paid Supplemental Data
22,000
23,000
23,000
24,000
Income Tax Paid Supplemental Data
283,000
230,000
127,000
45,000
End Cash Position
3,732,000
2,310,000
1,904,000
1,475,000
Beginning Cash Position
2,310,000
1,904,000
1,475,000
1,732,000
Effect Of Exchange Rate Changes
7,000
-17,000
1,000
-53,000
Changes In Cash
1,415,000
423,000
428,000
-204,000
Financing Cash Flow
-2,340,000
-1,343,000
-803,000
-344,000
Cash Flow From Continuing Financing Activities
-2,340,000
-1,343,000
-803,000
-344,000
Net Other Financing Charges
-770,000
-884,000
-459,000
-427,000
Proceeds From Stock Option Exercised
270,000
237,000
194,000
177,000
Net Common Stock Issuance
-1,840,000
-696,000
-538,000
0
Common Stock Payments
-1,840,000
-696,000
-538,000
0
Net Issuance Payments Of Debt
0
0
-94,000
-61,000
Net Long Term Debt Issuance
0
0
-94,000
-61,000
Long Term Debt Payments
0
0
-94,000
-61,000
Investing Cash Flow
-1,689,000
-2,501,000
-2,167,000
-2,583,000
Cash Flow From Continuing Investing Activities
-1,689,000
-2,501,000
-2,167,000
-2,583,000
Net Other Investing Changes
38,000
-36,000
-4,000
18,000
Net Investment Purchase And Sale
268,000
-1,460,000
-1,187,000
-1,960,000
Sale Of Investment
4,138,000
3,752,000
3,522,000
2,245,000
Purchase Of Investment
-3,870,000
-5,212,000
-4,709,000
-4,205,000
Net Business Purchase And Sale
-1,084,000
-113,000
-279,000
-91,000
Purchase Of Business
-1,084,000
-113,000
-279,000
-91,000
Net Intangibles Purchase And Sale
-43,000
-40,000
-3,000
0
Purchase Of Intangibles
-43,000
-40,000
-3,000
0
Net PPE Purchase And Sale
-868,000
-852,000
-694,000
-550,000
Purchase Of PPE
-868,000
-852,000
-694,000
-550,000
Operating Cash Flow
5,444,000
4,267,000
3,398,000
2,723,000
Cash Flow From Continuing Operating Activities
5,444,000
4,267,000
3,398,000
2,723,000
Change In Working Capital
29,000
-65,000
-101,000
174,000
Change In Other Working Capital
421,000
466,000
368,000
338,000
Change In Payables And Accrued Expense
304,000
55,000
34,000
215,000
Change In Accrued Expense
249,000
107,000
176,000
43,000
Change In Payable
55,000
-52,000
-142,000
172,000
Change In Account Payable
55,000
-52,000
-142,000
172,000
Change In Prepaid Assets
-384,000
-332,000
-203,000
-39,000
Change In Receivables
-312,000
-254,000
-300,000
-340,000
Changes In Account Receivables
-312,000
-254,000
-300,000
-340,000
Other Non Cash Items
725,000
499,000
459,000
375,000
Stock Based Compensation
1,955,000
1,746,000
1,604,000
1,401,000
Deferred Tax
249,000
98,000
-857,000
15,000
Deferred Income Tax
249,000
98,000
-857,000
15,000
Depreciation Amortization Depletion
738,000
564,000
562,000
433,000
Depreciation And Amortization
738,000
564,000
562,000
433,000
Operating Gains Losses
3,000
Net Income From Continuing Operations
1,748,000
1,425,000
1,731,000
325,000
3/7
Graham Score
Speculative Investor
Fails most of Graham's safety criteria. Treat with caution.
Graham's Fair Value
$21.71
Margin of Safety
0%
Market Cap / Net Assets
9.2x
Net Assets: $13.0B
Warren's Owner Earnings
$3.4B
Latest fiscal year
Graham's 7 Criteria
Defensive Investor Checklist
3/7 — Speculative Investor
✅
Adequate Size
Graham required companies large enough to withstand economic downturns. This threshold ($1.5B) is inflation-adjusted from Graham's original $100M — virtually all S&P 500 companies pass this today.
$13.3B
vs > $1.5B revenue
❌
Strong Financial Condition
Current assets must be at least twice current liabilities. Note: highly profitable companies (Apple, Domino's) often run negative or low working capital deliberately — they collect cash fast and stretch payables. A failing score here is not always a warning sign.
1.00x
vs Current Ratio > 2.0x
✅
Earnings Stability
Graham required uninterrupted positive earnings. Any loss year is a red flag for defensive investors. Growth companies and cyclicals may show occasional losses during investment cycles or downturns without being fundamentally unsound.
No loss years (4 yrs data)
vs No negative EPS years
❌
Dividend Record
Graham valued dividends as evidence of financial discipline and shareholder alignment. Many excellent modern businesses (Alphabet, Amazon, Berkshire Hathaway) pay no dividend, preferring to reinvest cash at high rates of return. Failing this criterion does not indicate a poor business — it may indicate a high-growth one.
No dividend
vs Uninterrupted dividends
✅
Earnings Growth
EPS grew from $0.32 to $1.67 over 3 years. Graham's 33% threshold was set over a 10-year period. Measured over fewer years (as here), the bar is proportionally lower. Share buybacks can also inflate EPS growth without reflecting underlying business improvement.
+421.9% EPS growth
vs > 33% EPS growth
❌
Moderate P/E Ratio
Graham's 15x P/E threshold was calibrated to 1960s market averages when interest rates were higher. Today's lower rate environment structurally supports higher multiples — the S&P 500 long-run average P/E is now closer to 20–25x. A stock trading at 20x is not automatically speculative in the modern context.
72.0x
vs P/E ≤ 15.0x
❌
Moderate Price-to-Book
Graham's 1.5x P/B threshold made sense when most company value was tangible. Today, intangible assets — brand, software, patents, network effects — rarely appear on the balance sheet. A high P/B in tech, pharma, or consumer brands often reflects intangible value, not overvaluation. P/FCF or EV/EBITDA are more reliable for asset-light businesses.
9.19x P/B (P/E×P/B: 662.2)
vs P/B ≤ 1.5x | P/E × P/B ≤ 22.5
Graham's 7 Criteria — Explained
What each criterion measures and why it matters.
✅ Adequate Size — $13.3Bvs > $1.5B revenue
Graham required companies large enough to withstand economic downturns. This threshold ($1.5B) is inflation-adjusted from Graham's original $100M — virtually all S&P 500 companies pass this today.
"The minimum size of an enterprise should be not less than $100 million of annual sales."
❌ Strong Financial Condition — 1.00xvs Current Ratio > 2.0x
Current assets must be at least twice current liabilities. Note: highly profitable companies (Apple, Domino's) often run negative or low working capital deliberately — they collect cash fast and stretch payables. A failing score here is not always a warning sign.
"For industrial companies, current assets should be at least twice current liabilities."
✅ Earnings Stability — No loss years (4 yrs data)vs No negative EPS years
Graham required uninterrupted positive earnings. Any loss year is a red flag for defensive investors. Growth companies and cyclicals may show occasional losses during investment cycles or downturns without being fundamentally unsound.
"The company should have shown no deficit in the past ten years."
❌ Dividend Record — No dividendvs Uninterrupted dividends
Graham valued dividends as evidence of financial discipline and shareholder alignment. Many excellent modern businesses (Alphabet, Amazon, Berkshire Hathaway) pay no dividend, preferring to reinvest cash at high rates of return. Failing this criterion does not indicate a poor business — it may indicate a high-growth one.
"Some current dividend payments — for at least the past 20 years."
EPS grew from $0.32 to $1.67 over 3 years. Graham's 33% threshold was set over a 10-year period. Measured over fewer years (as here), the bar is proportionally lower. Share buybacks can also inflate EPS growth without reflecting underlying business improvement.
"A minimum increase of at least one-third in per-share earnings over ten years."
❌ Moderate P/E Ratio — 72.0xvs P/E ≤ 15.0x
Graham's 15x P/E threshold was calibrated to 1960s market averages when interest rates were higher. Today's lower rate environment structurally supports higher multiples — the S&P 500 long-run average P/E is now closer to 20–25x. A stock trading at 20x is not automatically speculative in the modern context.
"The price-earnings ratio should be no more than 15 times average earnings."
Graham's 1.5x P/B threshold made sense when most company value was tangible. Today, intangible assets — brand, software, patents, network effects — rarely appear on the balance sheet. A high P/B in tech, pharma, or consumer brands often reflects intangible value, not overvaluation. P/FCF or EV/EBITDA are more reliable for asset-light businesses.
"The price should not be more than 1½ times book value. P/E × P/B ≤ 22.5."
These metrics estimate what ServiceNow, Inc. is worth based on fundamentals — independent of what the market prices it at.
Graham's Fair Value and NCAV are conservative floors.
EPV assumes zero growth. These are reference points, not price targets.
Net Current Asset Value
$-2.52
Negative NCAV — liabilities exceed current assets. Common in capital-return businesses (buybacks, debt-funded dividends) and capital-intensive industries. Not automatically a warning sign.
"Buy at two-thirds of net current assets." — Graham
Earnings Power Value
$19.60
Per share, no-growth floor. Compare to current price.
ROIC — Return on Invested Capital
9.2%
Return on Invested Capital — Buffett's preferred measure for asset-light businesses. ROIC > 15% consistently signals a durable competitive advantage (moat). More meaningful than P/B for software, pharma, and consumer brand companies where most value is intangible and off-balance-sheet.
Cash Flow Analysis
Metric
2025
2024
2023
2022
2021
Capital Expenditure % of Net Income
52.1%
62.6%
40.3%
169.2%
N/A
Repurchase of Capital Stock
-$1.8B
-$696M
-$538M
$0M
N/A
Free Cash Flow
$4.5B▲
$3.4B▲
$2.7B▲
$2.2B•
N/A•
Warren's Owner Earnings
$3.4B
$2.9B
$3.0B
$1.3B
N/A
Peers & Industry
No auto-detected peers for Software - Application. You can manually compare NOW against any stock using the Compare tool.
"The management of a business is its most important single factor — more important than market position, patents, or financial structure."
— Benjamin Graham
Capital Allocation & Alignment
Insider Ownership
0.17%
Low — management has little skin in the game
Return on Equity (ROE)
13.5%
Adequate — returns are moderate
Return on Assets (ROA)
6.7%
Strong — management uses assets efficiently
Share Buybacks (Latest Year)
$1.8B
Management is returning capital to shareholders via buybacks
Debt Trend YoY
+5.5% YoY
Debt is roughly stable
Leadership Team
William McDermott
Chairman & CEO
Age 63
Pay: $8,069,306
0.462% of net income
Gina Mastantuono
President & CFO
Age 55
Pay: $2,166,155
0.124% of net income
Amit Zavery
President, Chief Product Officer & COO
Age 53
Pay: $4,081,523
0.233% of net income
Frederic Luddy
Founder & Director
Age 70
Pay: $40,000
0.002% of net income
Paul Fipps
President of Global Customer Operations
Age 52
Pay: $2,196,545
0.126% of net income
Top Institutional Holders
Institution
% Owned
Shares
Blackrock Inc.
9.43%
97,501,594
Vanguard Capital Management LLC
6.57%
67,980,219
State Street Corporation
4.65%
48,058,492
Price (T.Rowe) Associates Inc
3.30%
34,109,888
JPMORGAN CHASE & CO
3.00%
30,996,941
Vanguard Portfolio Management LLC
2.43%
25,172,570
Geode Capital Management, LLC
2.36%
24,423,811
Morgan Stanley
2.26%
23,347,995
⚠️Current ratio below 1 — liquidity risk
Risk Analysis
Beta (Market Risk)
0.93
Low volatility — more stable than the market
Short Interest
5.4% of float
Moderate short interest
Debt-to-Equity
0.68x
Conservative balance sheet — low financial risk
Current Ratio
0.70x
Weak liquidity — current liabilities exceed current assets
52-Week Price Range
Low: $81.24Current: $115.26High: $194.73
Currently at 30% of 52-week range
ServiceNow, Inc. (NOW) fundamental analysis — Overall grade D based on profitability, financial health, valuation and cash flow. Graham's
Fair Value: $21.71. Margin of safety: 0%. Gross profit margin: 77.5%. Operating margin: 13.7%. Net margin: 13.2%. Market cap: $119.2B. Sector: Technology. Industry: Software - Application. Analysis powered by 360investing — free fundamental stock analysis based on Benjamin Graham and Warren Buffett
principles.
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