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ServiceNow, Inc. (NOW) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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ServiceNow, Inc. (NOW)

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Intrinsic Value (DCF)

Current$131.17
→
Intrinsic$627.47
+378%
$419.69$627.47$1,040.26
Market implies 1% growth for 5 years
DCF analysis suggests NOW could have 378% upside at 25% growth — verify assumptions match your view.
At $131, the market prices in only 1% growth — below historical 25%, suggesting low expectations.
Range: Bear $420 → Bull $1040. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →21%23%25%27%
8%$796$861$929$1002
10%$540$582$627$676
12%$404$436$469$504
14%$321$345$371$398

Bull Case

  • Bull case ($1040) offers 693% upside at 30% growth, 8% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (1%) ≤ historical CAGR (25%)

Bear Case

  • Bear case ($420) with 20% growth, 12% discount rate
  • Using 25% growth — aggressive, watch for mean reversion
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5-Year Free Cash Flow Projection

Year 1$4.27B
Year 2$5.34B
Year 3$6.67B
Year 4$8.34B
Year 5$10.42B
Terminal$165.14B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$3.42BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is NOW stock undervalued or overvalued?
🟢 UNDERVALUED

NOW trades at $131.17 vs. our DCF-derived intrinsic value of $426.99, implying +187% upside. At a 9.5% WACC and 25.0% projected FCF growth, the market appears to be underpricing the present value of NOW's future cash flows. The bear case ($286.20) still suggests upside, providing margin of safety.

What is NOW's intrinsic value?

Using a 5-year DCF model: Base FCF of $3.42B, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $-26M net debt and dividing by 0.21B shares: Bear $286.20 | Base $426.99 | Bull $633.36. Current price $131.17 implies +187% to base case.

How is NOW's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($88.97B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 26.1x.