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

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Zoom Video Communications (ZM) closed at $106.10 in the latest trading session, marking a -0.42% move from the prior day. This change lagged the S&P 500's 0.13% gain on the day. Meanwhile, the Dow gained 0.28%, and the Nasdaq, a tech-heavy index, lost 0.04%.

Prior to today's trading, shares of the video-conferencing company had lost 13.12% over the past month. This has was narrower than the Computer and Technology sector's loss of 13.84% and lagged the S&P 500's gain of 5.55% in that time.

Wall Street will be looking for positivity from Zoom Video Communications as it approaches its next earnings report date. The company is expected to report EPS of $0.92, down 32.35% from the prior-year quarter. 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. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 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. Zoom Video Communications currently has a Zacks Rank of #1 (Strong Buy).

Investors should also note Zoom Video Communications's current valuation metrics, including its Forward P/E ratio of 28.21. Its industry sports an average Forward P/E of 44.14, so we one might conclude that Zoom Video Communications is trading at a discount comparatively.

Meanwhile, ZM's PEG ratio is currently 2.02. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ZM's industry had an average PEG ratio of 2.54 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 136, putting it in the bottom 47% 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.

To follow ZM in the coming trading sessions, be sure to utilize Zacks.com.


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