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

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Zoom Video Communications (ZM - Free Report) closed the most recent trading day at $289.68, moving -0.35% from the previous trading session. This move lagged the S&P 500's daily gain of 0.34%. At the same time, the Dow added 0.69%, and the tech-heavy Nasdaq gained 0.42%.

Heading into today, shares of the video-conferencing company had gained 15.58% over the past month, outpacing the Computer and Technology sector's gain of 4.96% and the S&P 500's gain of 4.3% in that time.

Wall Street will be looking for positivity from ZM as it approaches its next earnings report date. This is expected to be August 31, 2020. On that day, ZM is projected to report earnings of $0.45 per share, which would represent 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.

Investors should also note any recent changes to analyst estimates for ZM. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

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 a Zacks Rank #2 (Buy).

Looking at its valuation, ZM is holding a Forward P/E ratio of 229.05. Its industry sports an average Forward P/E of 90.06, so we one might conclude that ZM is trading at a premium comparatively.

Investors should also note that ZM has a PEG ratio of 9.16 right now. 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 4.86 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 113, putting it in the top 45% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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