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

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Zoom Video Communications (ZM - Free Report) closed at $341.30 in the latest trading session, marking a +1.32% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.85%.

Heading into today, shares of the video-conferencing company had lost 6.23% over the past month, lagging the Computer and Technology sector's gain of 3.07% and the S&P 500's gain of 2.85% in that time.

ZM will be looking to display strength as it nears its next earnings release, which is expected to be August 30, 2021. 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, the Zacks Consensus Estimate for revenue is projecting net sales of $990.24 million, up 49.24% from the year-ago period.

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 +50.35%, respectively.

Investors should also note any 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.

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. The Zacks Consensus EPS estimate remained stagnant within the past month. ZM is currently sporting a Zacks Rank of #4 (Sell).

Valuation is also important, so investors should note that ZM has a Forward P/E ratio of 72.36 right now. This valuation marks a premium compared to its industry's average Forward P/E of 57.19.

We can also see that ZM currently has a PEG ratio of 4.35. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ZM's industry had an average PEG ratio of 3.87 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 203, which puts it in the bottom 21% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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 Zacks.com.


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