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Zacks Rank #1 (Strong Buy) stock Zoom Video Communications ((ZM - Free Report) ) is a video conferencing platform company that enables people to connect and communicate virtually. Zoom is the most popular conferencing platform and allows users to conduct online meetings, webinars, and virtual conferences through audio and video. Users can join Zoom meetings from various devices, making it a versatile and widely accessible communication solution. With features like screen sharing, chat, and collaboration tools, Zoom has become popular for remote work, online education and social interactions. The platform gained significant traction, especially during the COVID-19 pandemic, and continues to be a go-to choice for virtual meetings and remote collaboration.
Is “Work from Home” Here to Stay?
The work-from-home trend is likely here to stay due to several factors. The COVID-19 pandemic accelerated the adoption of remote work, prompting companies to invest in technologies that support virtual collaboration. Many employees reported experiencing increased flexibility and improved work-life balance during this period, leading to a desire for continued remote work options. Additionally, many employers saw cost savings associated with reduced office space, operational expenses, and actually experienced increased productivity in many instances. While many industries require employees to show up in person, the success of remote work during the pandemic demonstrated that it is a viable and productive model for many industries.
Perfect Earnings Track Record
As the COVID-19 pandemic broke out, Zoom was in the right place, at the right time. However, Zoom’s earnings were brought forward, and as they normalized, investors jumped ship. Nonetheless, Zoom’s expanding international footprint, security and privacy improvement efforts, and the hybrid/remote working wave, are helping the company to re-accelerate earnings.
Image Source: Zacks Investment Research
Most impressively, since its debut in April 2019, Zoom has beat Zacks Consensus Estimates in each quarter.
Image Source: Zacks Investment Research
Cheap from a Valuation Perspective
In the heat of the pandemic, ZM shares clearly got ahead of themselves when the price-to-earnings (p/e) ratio reached 500x. However, now that the stock has corrected from over $500 to under $70, shares once again look attractive from a valuation perspective. In fact, Zoom’s p/e ratio of 14.03x means that it is now cheaper than the S&P 500 Index.
Image Source: Zacks Investment Research
Strong Balance Sheet
Zoom has a strong balance sheet and generates significant cash flow, making it an attractive stock for investors. The company had cash and cash equivalents worth $6.49 billion as of October 31st. The company’s ability to generate strong cash flows will enable it to make major investments in product development and acquisitions in the future.
Bottom Line
Zoom Video Communications stands out as a leader in the video conference space. With its versatile platform, the work-from-home trend, and the favorable valuation, shares should be higher in six to twelve months.
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Bull of the Day: Zoom Video Comms (ZM)
The Leader in Video Conferencing
Zacks Rank #1 (Strong Buy) stock Zoom Video Communications ((ZM - Free Report) ) is a video conferencing platform company that enables people to connect and communicate virtually. Zoom is the most popular conferencing platform and allows users to conduct online meetings, webinars, and virtual conferences through audio and video. Users can join Zoom meetings from various devices, making it a versatile and widely accessible communication solution. With features like screen sharing, chat, and collaboration tools, Zoom has become popular for remote work, online education and social interactions. The platform gained significant traction, especially during the COVID-19 pandemic, and continues to be a go-to choice for virtual meetings and remote collaboration.
Is “Work from Home” Here to Stay?
The work-from-home trend is likely here to stay due to several factors. The COVID-19 pandemic accelerated the adoption of remote work, prompting companies to invest in technologies that support virtual collaboration. Many employees reported experiencing increased flexibility and improved work-life balance during this period, leading to a desire for continued remote work options. Additionally, many employers saw cost savings associated with reduced office space, operational expenses, and actually experienced increased productivity in many instances. While many industries require employees to show up in person, the success of remote work during the pandemic demonstrated that it is a viable and productive model for many industries.
Perfect Earnings Track Record
As the COVID-19 pandemic broke out, Zoom was in the right place, at the right time. However, Zoom’s earnings were brought forward, and as they normalized, investors jumped ship. Nonetheless, Zoom’s expanding international footprint, security and privacy improvement efforts, and the hybrid/remote working wave, are helping the company to re-accelerate earnings.
Image Source: Zacks Investment Research
Most impressively, since its debut in April 2019, Zoom has beat Zacks Consensus Estimates in each quarter.
Image Source: Zacks Investment Research
Cheap from a Valuation Perspective
In the heat of the pandemic, ZM shares clearly got ahead of themselves when the price-to-earnings (p/e) ratio reached 500x. However, now that the stock has corrected from over $500 to under $70, shares once again look attractive from a valuation perspective. In fact, Zoom’s p/e ratio of 14.03x means that it is now cheaper than the S&P 500 Index.
Image Source: Zacks Investment Research
Strong Balance Sheet
Zoom has a strong balance sheet and generates significant cash flow, making it an attractive stock for investors. The company had cash and cash equivalents worth $6.49 billion as of October 31st. The company’s ability to generate strong cash flows will enable it to make major investments in product development and acquisitions in the future.
Bottom Line
Zoom Video Communications stands out as a leader in the video conference space. With its versatile platform, the work-from-home trend, and the favorable valuation, shares should be higher in six to twelve months.