Back to top

Image: Bigstock

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

Read MoreHide Full Article

Zoom Video Communications (ZM - Free Report) closed at $336.42 in the latest trading session, marking a -0.14% move from the prior day. This change lagged the S&P 500's daily gain of 0.18%.

Prior to today's trading, shares of the video-conferencing company had gained 7% over the past month. This has lagged the Computer and Technology sector's gain of 9.78% and outpaced the S&P 500's gain of 6.99% in that time.

Investors will be hoping for strength from ZM as it approaches its next earnings release. On that day, ZM is projected to report earnings of $0.97 per share, which would represent year-over-year growth of 385%. Our most recent consensus estimate is calling for quarterly revenue of $905.24 million, up 175.84% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.66 per share and revenue of $3.8 billion, which would represent changes of +9.58% and +43.28%, respectively, from the prior year.

Any recent changes to analyst estimates for ZM should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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. The Zacks Consensus EPS estimate has moved 2.45% higher within the past month. ZM is holding a Zacks Rank of #3 (Hold) right now.

In terms of valuation, ZM is currently trading at a Forward P/E ratio of 92. Its industry sports an average Forward P/E of 77.53, so we one might conclude that ZM is trading at a premium comparatively.

Meanwhile, ZM's PEG ratio is currently 6.34. 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 4.35 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 182, which puts it in the bottom 29% 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.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Zoom Video Communications, Inc. (ZM) - free report >>

Published in