In the rapidly evolving landscape of technology, ServiceNow, Inc. (NOW) and EPAM Systems, Inc. (EPAM) stand out as pivotal players. Both companies operate within the technology sector, focusing on software applications and information technology services, respectively. Their innovative approaches to cloud computing and digital platform engineering create a significant overlap in market offerings. In this article, I will analyze these two companies to help you determine which one might be the more compelling investment opportunity.
Table of contents
Company Overview
ServiceNow, Inc. Overview
ServiceNow, Inc. (ticker: NOW) is a leading provider of enterprise cloud computing solutions, primarily focused on automating and managing services across various sectors. Founded in 2004 and headquartered in Santa Clara, California, the company has carved out a strong position in the software application industry, with its Now platform offering workflow automation, artificial intelligence, and IT service management applications. ServiceNow serves a diverse clientele, including government and healthcare, leveraging its cutting-edge technology to enhance operational efficiency and customer satisfaction. With a market capitalization of approximately $171.3B, it continues to expand its offerings and partnerships, such as with Celonis, to drive process automation.
EPAM Systems, Inc. Overview
EPAM Systems, Inc. (ticker: EPAM), established in 1993 and based in Newtown, Pennsylvania, specializes in digital platform engineering and software development services. The company provides a comprehensive range of services, including infrastructure management, software testing, and consulting, aimed at optimizing clients’ digital transformation journeys. With a focus on various industries such as financial services and healthcare, EPAM has positioned itself as a trusted partner for businesses seeking innovative technology solutions. Its market capitalization stands at around $10.3B, reflecting its significant presence in the information technology services sector.
Key Similarities and Differences
Both ServiceNow and EPAM operate within the technology sector, focusing on providing innovative solutions to enhance business efficiency. However, their business models differ: ServiceNow emphasizes a robust software platform for service management, while EPAM offers a broader range of engineering and consulting services tailored to digital transformation. This distinction shapes their market strategies and client engagement approaches, catering to varying needs in the enterprise landscape.
Income Statement Comparison
Here is a comparative analysis of the income statements for ServiceNow, Inc. and EPAM Systems, Inc. for the most recent fiscal year.
| Metric | ServiceNow, Inc. | EPAM Systems, Inc. |
|---|---|---|
| Revenue | 10.98B | 4.73B |
| EBITDA | 2.23B | 671.69M |
| EBIT | 1.76B | 544.58M |
| Net Income | 1.43B | 454.53M |
| EPS | 6.92 | 7.93 |
Interpretation of Income Statement
In the latest fiscal year, ServiceNow showcased a robust revenue growth to 10.98B, representing a significant increase from 8.97B the previous year. Similarly, EPAM showed steady performance with 4.73B in revenue, slightly up from 4.69B. ServiceNow’s net income decreased to 1.43B from 1.73B, indicating margin pressure despite revenue growth, while EPAM’s net income increased, demonstrating effective cost management with stable margins. Overall, ServiceNow’s performance reflects a need for improved operational efficiency, whereas EPAM appears to maintain effective cost controls amidst a competitive landscape.
Financial Ratios Comparison
The table below provides a comparative analysis of the most recent financial metrics for ServiceNow, Inc. (NOW) and EPAM Systems, Inc. (EPAM).
| Metric | [Company A: NOW] | [Company B: EPAM] |
|---|---|---|
| ROE | 14.83% | 12.52% |
| ROIC | 9.22% | 10.67% |
| P/E | 153.13 | 29.47 |
| P/B | 22.71 | 3.69 |
| Current Ratio | 1.10 | 2.96 |
| Quick Ratio | 1.10 | 2.96 |
| D/E | 0.24 | 0.05 |
| Debt-to-Assets | 11.18% | 3.44% |
| Interest Coverage | 59.30 | 1.00 |
| Asset Turnover | 0.54 | 0.99 |
| Fixed Asset Turnover | 4.47 | 14.07 |
| Payout ratio | 0% | 0% |
| Dividend yield | 0% | 0% |
Interpretation of Financial Ratios
In the analysis, ServiceNow exhibits a higher Price-to-Earnings (P/E) ratio compared to EPAM, indicating that investors are willing to pay a premium for its earnings. However, EPAM demonstrates a healthier debt position with a significantly lower debt-to-equity ratio and better interest coverage, which suggests lower risk. While both companies have no dividend payouts, EPAM’s current and quick ratios indicate stronger liquidity. Overall, while NOW shows strong growth potential, its high valuations warrant cautious consideration.
Dividend and Shareholder Returns
ServiceNow, Inc. (NOW) does not pay dividends, focusing instead on reinvesting profits to fuel growth. In 2024, the company maintained a strong free cash flow coverage ratio, supporting its operational needs and future initiatives. Similarly, EPAM Systems, Inc. (EPAM) also refrains from dividend payments, favoring growth investments over shareholder returns. Both companies engage in share buybacks, which can enhance shareholder value. This strategy aligns well with long-term value creation, provided they manage risks effectively.
Strategic Positioning
ServiceNow, Inc. (NOW) holds a significant market share in the enterprise cloud services sector, driven by its robust Now platform that automates workflows and integrates AI solutions. With a market cap of $171.3B, it faces moderate competitive pressure from companies like EPAM Systems, Inc. (EPAM), which specializes in digital platform engineering. Technological disruptions, particularly in AI and automation, challenge both firms to innovate continuously to maintain their competitive edge.
Stock Comparison
This section provides an analytical overview of the stock price dynamics for ServiceNow, Inc. (NOW) and EPAM Systems, Inc. (EPAM) over the past year, highlighting significant price movements and trading behaviors.
Trend Analysis
ServiceNow, Inc. (NOW): Over the past year, the stock has experienced a price change of +22.06%, indicating a bullish trend. However, recent data from September 14, 2025, to November 30, 2025, shows a decline of -11.16%, suggesting a shift towards a deceleration in momentum. The highest price reached was $1124.98, while the lowest stood at $656.93, with a standard deviation of 116.38 indicating notable volatility.
EPAM Systems, Inc. (EPAM): The stock has seen a significant decline of -35.68% over the past year, categorizing it as a bearish trend. In the recent analysis period from September 14, 2025, to November 30, 2025, there was a positive movement of +19.03%, with a trend slope of 3.23. The highest recorded price was $311.98, with a lowest price of $142.38, and a standard deviation of 46.0 reflects moderate volatility. The acceleration status indicates that the stock is still experiencing downward momentum.
In summary, the contrasting trends of NOW and EPAM highlight the importance of ongoing market evaluation and risk management in investment decisions.
Analyst Opinions
Recent analyst recommendations for ServiceNow, Inc. (NOW) indicate a “Buy” rating, supported by solid scores in discounted cash flow and return metrics, although its price-to-earnings and price-to-book ratios are less favorable. Analysts emphasize its strong growth potential. EPAM Systems, Inc. (EPAM) has received a “Buy” rating as well, with a focus on its robust return on assets and discounted cash flow metrics, despite some concerns regarding its price-to-earnings ratio. Overall, the consensus for both companies in 2025 leans towards a “Buy.”
Stock Grades
The latest grades for ServiceNow, Inc. and EPAM Systems, Inc. reflect a stable outlook from several reputable grading companies.
ServiceNow, Inc. Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| JP Morgan | maintain | Overweight | 2025-10-30 |
| Canaccord Genuity | maintain | Buy | 2025-10-30 |
| TD Cowen | maintain | Buy | 2025-10-30 |
| UBS | maintain | Buy | 2025-10-30 |
| Wells Fargo | maintain | Overweight | 2025-10-30 |
| Barclays | maintain | Overweight | 2025-10-30 |
| Citigroup | maintain | Buy | 2025-10-30 |
| UBS | maintain | Buy | 2025-10-14 |
| Morgan Stanley | upgrade | Overweight | 2025-09-24 |
| JMP Securities | maintain | Market Outperform | 2025-08-04 |
EPAM Systems, Inc. Grades
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Mizuho | maintain | Outperform | 2025-11-11 |
| JP Morgan | maintain | Overweight | 2025-11-07 |
| Morgan Stanley | maintain | Equal Weight | 2025-09-09 |
| JP Morgan | maintain | Overweight | 2025-08-20 |
| Barclays | maintain | Overweight | 2025-05-12 |
| Needham | maintain | Buy | 2025-05-09 |
| Guggenheim | maintain | Buy | 2025-05-09 |
| Piper Sandler | maintain | Neutral | 2025-05-09 |
| Morgan Stanley | maintain | Equal Weight | 2025-05-09 |
| Stifel | maintain | Buy | 2025-05-02 |
Overall, both companies maintain strong grades, with several “Overweight” and “Buy” recommendations, indicating a generally bullish sentiment among analysts. The consistent maintenance of these grades suggests a level of confidence in their future performance.
Target Prices
The current consensus target prices from reputable analysts indicate promising potential for both ServiceNow, Inc. and EPAM Systems, Inc.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| ServiceNow, Inc. | 1315 | 860 | 1172.71 |
| EPAM Systems, Inc. | 185 | 175 | 180 |
For ServiceNow, Inc. (NOW), with a current price of 825.31, the consensus target of 1172.71 suggests significant upside potential. Meanwhile, EPAM Systems, Inc. (EPAM) is trading at 185.8, closely aligned with its consensus target of 180, indicating a more stable outlook.
Strengths and Weaknesses
The following table summarizes the strengths and weaknesses of ServiceNow, Inc. (NOW) and EPAM Systems, Inc. (EPAM) based on recent financial data.
| Criterion | ServiceNow, Inc. (NOW) | EPAM Systems, Inc. (EPAM) |
|---|---|---|
| Diversification | Moderate | High |
| Profitability | High (Net Margin: 12.97%) | Moderate (Net Margin: 9.61%) |
| Innovation | Strong | Strong |
| Global presence | Strong | Very Strong |
| Market Share | High | Moderate |
| Debt level | Low (Debt/Equity: 0.24) | Very Low (Debt/Equity: 0.05) |
Key takeaways indicate that ServiceNow excels in profitability and market share, while EPAM demonstrates notable global presence and diversification. However, both companies exhibit manageable debt levels, which is crucial for investment stability.
Risk Analysis
In this section, I will outline the key risks associated with ServiceNow, Inc. and EPAM Systems, Inc., which are crucial for investors to consider.
| Metric | ServiceNow, Inc. | EPAM Systems, Inc. |
|---|---|---|
| Market Risk | High | Moderate |
| Regulatory Risk | Moderate | Moderate |
| Operational Risk | Moderate | High |
| Environmental Risk | Low | Low |
| Geopolitical Risk | Moderate | High |
Both companies face significant market risks due to their reliance on technology trends. Moreover, EPAM is particularly exposed to geopolitical factors, given its international operations. Recent developments, including regulatory changes, could significantly influence their operational frameworks.
Which one to choose?
When comparing ServiceNow, Inc. (NOW) and EPAM Systems, Inc. (EPAM), both companies show strengths and weaknesses that cater to different investor profiles. ServiceNow has a robust market cap of $218B and impressive revenue growth, with a net income margin of around 13%. However, its high P/E ratio of 153 suggests a premium valuation. In contrast, EPAM, with a market cap of $13B, is experiencing a bearish stock trend but has a lower P/E ratio of 29, indicating a more attractive entry point for value-oriented investors.
Analysts rate NOW at a “B” and EPAM at “B+”, suggesting that while NOW is solid, EPAM offers a slightly better overall score. For growth-focused investors, NOW may be preferable due to its larger scale and revenue growth potential, while value investors might find EPAM’s lower valuation and recent price recovery more appealing.
Both companies face industry risks such as competition and market dependence, which could impact their future performance.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Go further
I encourage you to read the complete analyses of ServiceNow, Inc. and EPAM Systems, Inc. to enhance your investment decisions:
