Zoom Video Communications (ZM) Outpaces Stock Market Gains: What You Should Know
Zoom Video Communications (ZM) closed the most recent trading day at $103.18, moving +0.78% from the previous trading session. The stock outpaced the S&P 500's daily gain of 0.23%. Elsewhere, the Dow gained 0.06%, while the tech-heavy Nasdaq added 0.1%.
Prior to today's trading, shares of the video-conferencing company had lost 4.4% over the past month. This has lagged the Computer and Technology sector's gain of 11.35% and the S&P 500's gain of 10.76% in that time.
Investors will be hoping for strength from Zoom Video Communications as it approaches its next earnings release, which is expected to be August 22, 2022. 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%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.12 billion, up 9.28% from the year-ago period.
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.
Any recent changes to analyst estimates for Zoom Video Communications should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.
Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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. The Zacks Consensus EPS estimate remained stagnant within the past month. Zoom Video Communications is holding a Zacks Rank of #3 (Hold) right now.
Digging into valuation, Zoom Video Communications currently has a Forward P/E ratio of 27.1. For comparison, its industry has an average Forward P/E of 45.92, which means Zoom Video Communications is trading at a discount to the group.
Meanwhile, ZM's PEG ratio is currently 1.94. 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. Internet - Software stocks are, on average, holding a PEG ratio of 2.78 based on yesterday's closing prices.
The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 135, putting it in the bottom 47% 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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