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

In the latest trading session, Zoom Video Communications (ZM) closed at $267.34, marking a -0.25% move from the previous day. This move lagged the S&P 500's daily gain of 0.36%. Meanwhile, the Dow gained 0.62%, and the Nasdaq, a tech-heavy index, added 0.35%.

Investors will be hoping for strength from ZM as it approaches its next earnings release, which is expected to be August 31, 2020. In that report, analysts expect ZM to post earnings of $0.45 per share. This would mark year-over-year growth of 462.5%. Meanwhile, our latest consensus estimate is calling for revenue of $497.52 million, up 241.17% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $1.26 per share and revenue of $1.80 billion. These totals would mark changes of +260% and +188.67%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for ZM. These recent revisions tend to reflect the evolving nature of short-term business trends. 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. 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. Within the past 30 days, our consensus EPS projection has moved 0.08% lower. ZM is holding a Zacks Rank of #3 (Hold) right now.

Looking at its valuation, ZM is holding a Forward P/E ratio of 211.93. For comparison, its industry has an average Forward P/E of 81.75, which means ZM is trading at a premium to the group.

Also, we should mention that ZM has a PEG ratio of 8.48. 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. ZM's industry had an average PEG ratio of 6.17 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 107, putting it in the top 43% 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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