NOW: Double digit growth with strong MOAT at a discount.
u/AceStrikeer ·
Reddit — r/ValueInvesting
· August 24, 2026 at 13:40
· ⬆ 15 pts
· 💬 14 comments
| View on Reddit ↗
AI Summary
Summary
Author argues ServiceNow (NOW) is a high-quality IT Service Management leader with double-digit revenue/FCF growth, a wide moat from high switching costs, and valuation metrics near historic lows.
Thesis: The market has beaten down NOW along with other SaaS names, but NOW’s fundamentals and discounted cash flow suggest it is trading below intrinsic value.
Quality assessment: Decent value-oriented DD with key financial metrics and moat reasoning, but lacks deep competitive/valuation sensitivity analysis; more of a well-argued thesis than exhaustive research.
Score15
Comments14
Upvote %86%
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Double digit growth, strong moat, high quality business and market leader at IT Service Management. This is clearly a very strong company at a price well below intrinsic value.
Here are the numbers (Should be part of all ValueInvesting analysis) :
Net Gain Margin: \~11%
Operating Cash Flow: $5.44B (FY2025)
Free Cash Flow: $4.64B (FY2025)
Debt / Equity: \~60%
Cash / Equity: \~48%
Revenue Growth: +21% YoY
Free Cash Flow Growth: +35% YoY
Operating Cash Flow Growth: +27.6% YoY
Moat: NOW has a “land-and-expand” business model. Once deeply integrated into a company’s workflows, data, and processes, switching costs become pretty high. This gives NOW a clear MOAT over its competitors.
Main weakness: Net gain isn't spectacular. Debt increased significantly after several acquisition, whose products now complements NOW's product range.
Valuation: NOW's PS, PB and Price to Cashflow has never been lower in the past. Even with the Discounted Cashflow Calculation it's below intrinsic value.
I know we talked about NOW before, but in my opinion it's strongest company among all beaten down SaaS companies like ADBE, PAYC, TTD, INTU, ... And the stock is still available for a reasonable price.
ServiceNow has 21% YoY revenue growth, 35% FCF growth, strong margins, and a market-leading position in IT Service Management. FCF/PS/PB multiples are at historic lows while growth remains robust, creating a potential mispricing opportunity in a beaten-down SaaS environment. High-quality compounder with a durable moat is available at a discount; long-term investors may be rewarded as growth continues and sentiment normalizes. Debt increased from acquisitions; net margin is not spectacular; further SaaS de-rating or macro weakness could push valuation lower.
This Reddit post, published August 24, 2026,
features u/AceStrikeer
discussing NOW.
1 trade idea extracted by AI with direction and confidence scoring.