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Zoom Video Communications (ZM) Gains But Lags Market: What You Should Know

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Zoom Video Communications (ZM) closed at $106.22 in the latest trading session, marking a +0.29% move from the prior day. This move lagged the S&P 500's daily gain of 1.21%. Meanwhile, the Dow gained 1.03%, and the Nasdaq, a tech-heavy index, added 0.14%.

Heading into today, shares of the video-conferencing company had lost 5.33% over the past month, lagging the Computer and Technology sector's gain of 2.22% and the S&P 500's gain of 3.2% in that time.

Investors will be hoping for strength from Zoom Video Communications as it approaches its next earnings release. On that day, Zoom Video Communications is projected to report earnings of $0.92 per share, which would represent a year-over-year decline of 32.35%. Our most recent consensus estimate is calling for quarterly revenue of $1.12 billion, up 9.28% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.78 per share and revenue of $4.54 billion, which would represent changes of -25.44% and +10.68%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for Zoom Video Communications. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. Zoom Video Communications is currently sporting a Zacks Rank of #3 (Hold).

Investors should also note Zoom Video Communications's current valuation metrics, including its Forward P/E ratio of 28.04. This valuation marks a discount compared to its industry's average Forward P/E of 43.37.

Meanwhile, ZM's PEG ratio is currently 2.01. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. ZM's industry had an average PEG ratio of 2.32 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 153, which puts it in the bottom 40% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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