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Zoom Video Communications (ZM) Gains As Market Dips: What You Should Know

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Zoom Video Communications (ZM) closed the most recent trading day at $378.96, moving +0.23% from the previous trading session. This change outpaced the S&P 500's 0.18% loss on the day.

Coming into today, shares of the video-conferencing company had lost 2.77% in the past month. In that same time, the Computer and Technology sector gained 3.16%, while the S&P 500 gained 2.44%.

Investors will be hoping for strength from ZM as it approaches its next earnings release. On that day, ZM is projected to report earnings of $1.16 per share, which would represent year-over-year growth of 26.09%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $990.32 million, up 49.25% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $4.66 per share and revenue of $3.99 billion, which would represent changes of +39.52% and +50.34%, respectively, from the prior year.

Any recent changes to analyst estimates for ZM should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. ZM is holding a Zacks Rank of #1 (Strong Buy) right now.

Digging into valuation, ZM currently has a Forward P/E ratio of 81.21. This represents a premium compared to its industry's average Forward P/E of 62.66.

It is also worth noting that ZM currently has a PEG ratio of 4.88. 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. The Internet - Software was holding an average PEG ratio of 3.63 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 184, which puts it in the bottom 28% 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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