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ZM was the poster-child of the COVID-era concerning stocks.
A growth cooldown caused many to forget about the stock.
A return to more 'normal' valuation levels sets it up nicely.
Zoom Video Communications' (ZM - Free Report) cloud-native unified communications platform, which combines video, audio, phone, screen sharing, and chat functionalities, makes remote-working and collaboration easy.
The stock is a current Zacks Rank #1 (Strong Buy) thanks to favorable EPS revisions, as shown below. The trend has been notably bullish for its current fiscal year, with the $5.96 Zacks Consensus EPS estimate suggesting roughly 8% YoY growth.
Image Source: Zacks Investment Research
The stock also resides in the Zacks Internet - Software industry, which is currently ranked in the top 27% of all Zacks Industries.
Zoom Bounces Back?
Most are familiar with Zoom due to the pandemic, and its platform was a big reason many companies were able to continue their operations uninterrupted during lockdowns. The stock suffered post-pandemic due to a growth cooldown but has shown strong signs of a turnaround over the past six months, gaining nearly 8%.
As shown below, the company’s YoY sales growth rates have turned around nicely over recent periods, reflecting broader momentum.
Image Source: Zacks Investment Research
In addition, Zoom’s growing efficiency over recent years can’t be overlooked, with margins regularly improving. Please note that the chart below tracks margins on a trailing twelve-month basis.
Image Source: Zacks Investment Research
Shares have also come way off their rich valuations seen during the period, with the current 13.7X forward 12-month earnings multiple a fraction of the 49.6X five-year median and five-year highs of 246.3X. Shares certainly got a bit ‘ahead’ of themselves on valuation, but the normalization now provides a shield against any growth shocks.
There were several notable highlights in its latest quarterly release, with ZM now having more than 4.3k customers contributing more than $100,000 in trailing twelve-month revenue, up 9.2% from the same period last year. Importantly, its cash-generating abilities have also continued to improve, with operating cash flow soaring to $630 million compared to a $483 million print last year.
Bottom Line
Investors can implement a stellar strategy to find expected winners by taking advantage of the Zacks Rank – one of the most powerful market tools that provides a massive edge.
The top 5% of all stocks receive the highly coveted Zacks Rank #1 (Strong Buy). These stocks should outperform the market more than any other rank.
Zoom Video Communications (ZM - Free Report) would be an excellent stock for investors to consider, as displayed by its Zack Rank #1 (Strong Buy).
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Bull of the Day: Zoom Video Communications (ZM)
Key Takeaways
Zoom Video Communications' (ZM - Free Report) cloud-native unified communications platform, which combines video, audio, phone, screen sharing, and chat functionalities, makes remote-working and collaboration easy.
The stock is a current Zacks Rank #1 (Strong Buy) thanks to favorable EPS revisions, as shown below. The trend has been notably bullish for its current fiscal year, with the $5.96 Zacks Consensus EPS estimate suggesting roughly 8% YoY growth.
Image Source: Zacks Investment Research
The stock also resides in the Zacks Internet - Software industry, which is currently ranked in the top 27% of all Zacks Industries.
Zoom Bounces Back?
Most are familiar with Zoom due to the pandemic, and its platform was a big reason many companies were able to continue their operations uninterrupted during lockdowns. The stock suffered post-pandemic due to a growth cooldown but has shown strong signs of a turnaround over the past six months, gaining nearly 8%.
As shown below, the company’s YoY sales growth rates have turned around nicely over recent periods, reflecting broader momentum.
Image Source: Zacks Investment Research
In addition, Zoom’s growing efficiency over recent years can’t be overlooked, with margins regularly improving. Please note that the chart below tracks margins on a trailing twelve-month basis.
Image Source: Zacks Investment Research
Shares have also come way off their rich valuations seen during the period, with the current 13.7X forward 12-month earnings multiple a fraction of the 49.6X five-year median and five-year highs of 246.3X. Shares certainly got a bit ‘ahead’ of themselves on valuation, but the normalization now provides a shield against any growth shocks.
There were several notable highlights in its latest quarterly release, with ZM now having more than 4.3k customers contributing more than $100,000 in trailing twelve-month revenue, up 9.2% from the same period last year. Importantly, its cash-generating abilities have also continued to improve, with operating cash flow soaring to $630 million compared to a $483 million print last year.
Bottom Line
Investors can implement a stellar strategy to find expected winners by taking advantage of the Zacks Rank – one of the most powerful market tools that provides a massive edge.
The top 5% of all stocks receive the highly coveted Zacks Rank #1 (Strong Buy). These stocks should outperform the market more than any other rank.
Zoom Video Communications (ZM - Free Report) would be an excellent stock for investors to consider, as displayed by its Zack Rank #1 (Strong Buy).