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

Zoom Video Communications (ZM) closed the most recent trading day at $294.68, moving -0.2% from the previous trading session. This change lagged the S&P 500's 0.17% gain on the day. At the same time, the Dow added 0.57%, and the tech-heavy Nasdaq lost 0.34%.

Coming into today, shares of the video-conferencing company had gained 16.99% in the past month. In that same time, the Computer and Technology sector gained 13.74%, while the S&P 500 gained 8.34%.

ZM will be looking to display strength as it nears 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%. Our most recent consensus estimate is calling for quarterly revenue of $498.18 million, up 241.62% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $1.27 per share and revenue of $1.80 billion, which would represent changes of +262.86% and +189.16%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for ZM. These recent revisions tend to reflect the evolving nature of short-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.76% higher. ZM is currently sporting a Zacks Rank of #2 (Buy).

Valuation is also important, so investors should note that ZM has a Forward P/E ratio of 232.66 right now. This represents a premium compared to its industry's average Forward P/E of 92.12.

Also, we should mention that ZM has a PEG ratio of 9.31. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Internet - Software was holding an average PEG ratio of 5.14 at yesterday's closing price.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 119, putting it in the top 47% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.