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

Zacks Equity Research
·3 min read

Zoom Video Communications (ZM) closed the most recent trading day at $399.15, moving -1.1% from the previous trading session. This move lagged the S&P 500's daily gain of 1.17%. At the same time, the Dow added 1.6%, and the tech-heavy Nasdaq gained 0.8%.

Heading into today, shares of the video-conferencing company had lost 24.76% over the past month, lagging the Computer and Technology sector's gain of 0.8% and the S&P 500's gain of 2.26% in that time.

Wall Street will be looking for positivity from ZM as it approaches its next earnings report date. This is expected to be November 30, 2020. On that day, ZM is projected to report earnings of $0.75 per share, which would represent year-over-year growth of 733.33%. Our most recent consensus estimate is calling for quarterly revenue of $694.51 million, up 316.9% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.49 per share and revenue of $2.40 billion, which would represent changes of +611.43% and +285.82%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for ZM. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. ZM is holding a Zacks Rank of #3 (Hold) right now.

Looking at its valuation, ZM is holding a Forward P/E ratio of 162.15. This valuation marks a premium compared to its industry's average Forward P/E of 87.61.

Meanwhile, ZM's PEG ratio is currently 6.49. 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 industry currently had an average PEG ratio of 6 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 179, which puts it in the bottom 30% 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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Zacks Investment Research