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Zoom Video Communications (ZM) Stock Drops Despite Market Gains: Important Facts to Note

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The most recent trading session ended with Zoom Video Communications (ZM - Free Report) standing at $64.27, reflecting a -0.89% shift from the previouse trading day's closing. This move lagged the S&P 500's daily gain of 1.07%. Elsewhere, the Dow gained 0.35%, while the tech-heavy Nasdaq added 1.74%.

Prior to today's trading, shares of the video-conferencing company had lost 3.06% over the past month. This has lagged the Computer and Technology sector's gain of 4.83% and the S&P 500's gain of 2.93% in that time.

Market participants will be closely following the financial results of Zoom Video Communications in its upcoming release. The company plans to announce its earnings on February 26, 2024. On that day, Zoom Video Communications is projected to report earnings of $1.15 per share, which would represent a year-over-year decline of 5.74%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $1.13 billion, up 0.97% from the year-ago period.

It's also important for investors to be aware of any recent modifications to analyst estimates for Zoom Video Communications. These latest adjustments often mirror the shifting dynamics of short-term business patterns. Consequently, upward revisions in estimates express analysts' positivity towards the company's business operations and its ability to generate profits.

Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional rating system.

The Zacks Rank system, stretching from #1 (Strong Buy) to #5 (Strong Sell), has a noteworthy track record of outperforming, validated by third-party audits, with stocks rated #1 producing an average annual return of +25% since the year 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. Right now, Zoom Video Communications possesses a Zacks Rank of #1 (Strong Buy).

In the context of valuation, Zoom Video Communications is at present trading with a Forward P/E ratio of 13.99. This signifies a discount in comparison to the average Forward P/E of 31.2 for its industry.

We can additionally observe that ZM currently boasts a PEG ratio of 0.42. 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. The average PEG ratio for the Internet - Software industry stood at 1.67 at the close of the market yesterday.

The Internet - Software industry is part of the Computer and Technology sector. With its current Zacks Industry Rank of 78, this industry ranks in the top 31% of all industries, numbering over 250.

The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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