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

Zacks Equity Research
·3 mins read

Zoom Video Communications (ZM) closed at $491.54 in the latest trading session, marking a -0.18% move from the prior day. This change lagged the S&P 500's daily gain of 1.64%. Elsewhere, the Dow gained 0.88%, while the tech-heavy Nasdaq added 2.56%.

Prior to today's trading, shares of the video-conferencing company had gained 28.07% over the past month. This has outpaced the Computer and Technology sector's gain of 3.41% and the S&P 500's gain of 2.44% in that time.

ZM will be looking to display strength as it nears its next earnings release. In that report, analysts expect ZM to post earnings of $0.75 per share. This would mark year-over-year growth of 733.33%. Our most recent consensus estimate is calling for quarterly revenue of $694.19 million, up 316.7% from the year-ago period.

ZM's full-year Zacks Consensus Estimates are calling for earnings of $2.48 per share and revenue of $2.40 billion. These results would represent year-over-year changes of +608.57% and +285.56%, respectively.

It is also important to note the recent changes to analyst estimates for ZM. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about 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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection has moved 15.46% higher. ZM is holding a Zacks Rank of #1 (Strong Buy) right now.

Investors should also note ZM's current valuation metrics, including its Forward P/E ratio of 198.33. For comparison, its industry has an average Forward P/E of 84.56, which means ZM is trading at a premium to the group.

Also, we should mention that ZM has a PEG ratio of 7.93. 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. Internet - Software stocks are, on average, holding a PEG ratio of 6.4 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 169, putting it in the bottom 34% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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Zoom Video Communications, Inc. (ZM) : Free Stock Analysis Report
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