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Zoom Video Communications (ZM) Dips More Than Broader Markets: What You Should Know

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In the latest trading session, Zoom Video Communications (ZM - Free Report) closed at $367.54, marking a -1.5% move from the previous day. This change lagged the S&P 500's 0.47% loss on the day.

Coming into today, shares of the video-conferencing company had lost 4.04% in the past month. In that same time, the Computer and Technology sector gained 3.99%, while the S&P 500 gained 3.38%.

Investors will be hoping for strength from ZM as it approaches its next earnings release. The company is expected to report EPS of $1.16, up 26.09% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $990.32 million, up 49.25% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $4.66 per share and revenue of $3.99 billion. These totals would mark changes of +39.52% and +50.34%, 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. The Zacks Consensus EPS estimate remained stagnant within the past month. ZM is currently a Zacks Rank #1 (Strong Buy).

Digging into valuation, ZM currently has a Forward P/E ratio of 80.15. This valuation marks a premium compared to its industry's average Forward P/E of 66.24.

Meanwhile, ZM's PEG ratio is currently 5.13. 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. ZM's industry had an average PEG ratio of 3.69 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 215, putting it in the bottom 16% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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