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

Zacks Equity Research
·3 min read

In the latest trading session, Zoom Video Communications (ZM) closed at $517.79, marking a +1.23% move from the previous day. The stock outpaced the S&P 500's daily loss of 1.86%. At the same time, the Dow lost 2.3%, and the tech-heavy Nasdaq lost 1.64%.

Heading into today, shares of the video-conferencing company had gained 10.01% over the past month, outpacing the Computer and Technology sector's gain of 9.23% and the S&P 500's gain of 7.63% in that time.

Wall Street will be looking for positivity from ZM as it approaches its next earnings report date. On that day, ZM is projected to report earnings of $0.75 per share, which would represent year-over-year growth of 733.33%. Meanwhile, our latest consensus estimate is calling for revenue of $694.51 million, up 316.9% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $2.48 per share and revenue of $2.40 billion. These totals would mark changes of +608.57% and +285.82%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for ZM. These revisions typically reflect the latest short-term business trends, which can change frequently. 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. The Zacks Consensus EPS estimate has moved 7.17% higher within the past month. ZM is holding a Zacks Rank of #1 (Strong Buy) right now.

Looking at its valuation, ZM is holding a Forward P/E ratio of 206.03. For comparison, its industry has an average Forward P/E of 82.28, which means ZM is trading at a premium to the group.

Meanwhile, ZM's PEG ratio is currently 8.24. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Internet - Software was holding an average PEG ratio of 6.64 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 168, which puts it in the bottom 34% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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Zacks Investment Research