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Zoom Video Communications (ZM) Dips More Than Broader Markets: What You Should Know

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In the latest trading session, Zoom Video Communications (ZM) closed at $98.92, marking a -0.93% move from the previous day. This move lagged the S&P 500's daily loss of 0.84%. Elsewhere, the Dow lost 0.69%, while the tech-heavy Nasdaq lost 0.05%.

Prior to today's trading, shares of the video-conferencing company had lost 9.23% over the past month. This has lagged the Computer and Technology sector's gain of 1.72% and the S&P 500's gain of 2.02% in that time.

Investors will be hoping for strength from Zoom Video Communications as it approaches its next earnings release. In that report, analysts expect Zoom Video Communications to post earnings of $0.92 per share. This would mark a year-over-year decline of 32.35%. Meanwhile, our latest consensus estimate is calling for revenue of $1.12 billion, up 9.28% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $3.78 per share and revenue of $4.54 billion. These totals would mark changes of -25.44% and +10.68%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for Zoom Video Communications. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. Zoom Video Communications is holding a Zacks Rank of #2 (Buy) right now.

Looking at its valuation, Zoom Video Communications is holding a Forward P/E ratio of 26.43. Its industry sports an average Forward P/E of 42.85, so we one might conclude that Zoom Video Communications is trading at a discount comparatively.

Also, we should mention that ZM has a PEG ratio of 1.9. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Internet - Software was holding an average PEG ratio of 2.38 at yesterday's closing price.

The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 139, which puts it in the bottom 45% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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