Back to top

Image: Bigstock

Zoom Video Communications (ZM) Gains But Lags Market: What You Should Know

Read MoreHide Full Article

In the latest trading session, Zoom Video Communications (ZM - Free Report) closed at $355.81, marking a +0.45% move from the previous day. This move lagged the S&P 500's daily gain of 1.52%.

Prior to today's trading, shares of the video-conferencing company had lost 4.08% over the past month. This has lagged the Computer and Technology sector's gain of 1.56% and the S&P 500's gain of 2.41% in that time.

Investors will be hoping for strength from ZM as it approaches its next earnings release. In that report, analysts expect ZM to post earnings of $1.16 per share. This would mark year-over-year growth of 26.09%. Meanwhile, our latest consensus estimate is calling for revenue of $990.32 million, up 49.25% from the prior-year quarter.

ZM's full-year Zacks Consensus Estimates are calling for earnings of $4.66 per share and revenue of $3.99 billion. These results would represent year-over-year changes of +39.52% and +50.34%, respectively.

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.

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, 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. The Zacks Consensus EPS estimate remained stagnant within the past month. ZM is holding a Zacks Rank of #1 (Strong Buy) right now.

Valuation is also important, so investors should note that ZM has a Forward P/E ratio of 76.08 right now. This valuation marks a premium compared to its industry's average Forward P/E of 67.61.

Investors should also note that ZM has a PEG ratio of 4.87 right now. 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. ZM's industry had an average PEG ratio of 3.47 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 200, putting it in the bottom 22% 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.

To follow ZM in the coming trading sessions, be sure to utilize

In-Depth Zacks Research for the Tickers Above

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

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

Published in