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Zoom Video Communications (ZM) Gains But Lags Market: What You Should Know

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Zoom Video Communications (ZM - Free Report) closed the most recent trading day at $261.18, moving +0.28% from the previous trading session. This move lagged the S&P 500's daily gain of 0.58%. Elsewhere, the Dow gained 0.62%, while the tech-heavy Nasdaq added 0.24%.

Prior to today's trading, shares of the video-conferencing company had gained 3.02% over the past month. This has lagged the Computer and Technology sector's gain of 7.08% and the S&P 500's gain of 5.34% in that time.

ZM will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.45, up 462.5% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $497.52 million, up 241.17% from the prior-year quarter.

ZM's full-year Zacks Consensus Estimates are calling for earnings of $1.26 per share and revenue of $1.80 billion. These results would represent year-over-year changes of +260% and +188.67%, respectively.

Investors should also note any 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.46% higher. ZM currently has a Zacks Rank of #1 (Strong Buy).

Looking at its valuation, ZM is holding a Forward P/E ratio of 205.96. This represents a premium compared to its industry's average Forward P/E of 78.82.

Meanwhile, ZM's PEG ratio is currently 8.24. 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. The Internet - Software industry currently had an average PEG ratio of 4.06 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 84, putting it in the top 34% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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