Buffett Brain · Research note
Score updated 22 Oct 2026
NOW· Technology
ServiceNow
ServiceNow's robust revenue growth and top-quintile gross margins are overshadowed by a stretched valuation at a P/E of 72.6.
Buffett fit
Partial fit
Owner
46
Durability
89
Management
86
Price
7
Score updated 22 Oct 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Technology stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
Owning 100% of ServiceNow, we would focus on maintaining its lead in workflow automation and expanding its platform capabilities.
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ServiceNow's durability is supported by its model and strong .
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ServiceNow's management has shown restraint in share , with a 5-year buyback yield of 0.48%.
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The current valuation is challenging with an earnings yield of 1.38% and yield of 3.6%, far below the typical 8-10% threshold for a no-brainer entry.
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- The full reasoning behind all four pillars
- The 5-year price target and the return it implies
- What would change the call
- Graham, Lynch and Greenblatt on the same stock
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
6- 1 of 76.6% is top-quintile in the sector.
- 2Revenue CAGR of 22.5% indicates strong growth momentum.
- 3 of $4.58B supports financial flexibility.
- 4Interest coverage ratio of 156.3 shows strong ability to meet obligations.
Concerns
5- 1 ratio of 72.6 suggests high growth expectations.
- 2 of 10.13% is below the sector top-quintile cutoff of 13.4%.
- 3 of 13.44% is below the sector top-quintile of 18.0%.
- 4Current ratio of 0.85 indicates potential liquidity concerns.
Price history
$157+12.5%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
ServiceNow provides enterprise cloud computing solutions with a focus on workflow automation and IT service management. It operates the Now platform, serving diverse industries including financial services and healthcare. The company boasts a of 76.6%, indicating strong . The business model relies on subscription revenues, providing recurring income and resilience during economic downturns.
How this analysis has moved
The call has held across 5 reviews.
Sep 27, 2026 → Oct 22, 2026
What other investors would say
The same company, judged by three other documented playbooks.
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