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Here's Why Zoom Video Communications (ZM) Fell More Than Broader Market

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Zoom Video Communications (ZM - Free Report) closed the most recent trading day at $61.32, moving -1.29% from the previous trading session. The stock's performance was behind the S&P 500's daily loss of 0.6%. At the same time, the Dow lost 0.17%, and the tech-heavy Nasdaq lost 0.92%.

Shares of the video-conferencing company have depreciated by 10.73% over the course of the past month, underperforming the Computer and Technology sector's gain of 3.1% and the S&P 500's gain of 3.56%.

The investment community will be paying close attention to the earnings performance of Zoom Video Communications in its upcoming release. The company is slated to reveal its earnings on February 26, 2024. The company's upcoming EPS is projected at $1.15, signifying a 5.74% drop compared to the same quarter of the previous year. At the same time, our most recent consensus estimate is projecting a revenue of $1.13 billion, reflecting a 0.98% rise from the equivalent quarter last year.

Furthermore, it would be beneficial for investors to monitor any recent shifts in analyst projections for Zoom Video Communications. Recent revisions tend to reflect the latest near-term business trends. Consequently, upward revisions in estimates express analysts' positivity towards the company's business operations and its ability to generate profits.

Empirical research indicates that these revisions in estimates have a direct correlation with impending 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, 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. Zoom Video Communications currently has a Zacks Rank of #3 (Hold).

In the context of valuation, Zoom Video Communications is at present trading with a Forward P/E ratio of 13.4. This denotes a discount relative to the industry's average Forward P/E of 31.91.

Investors should also note that ZM has a PEG ratio of 0.4 right now. 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. The Internet - Software was holding an average PEG ratio of 1.87 at yesterday's closing price.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 81, putting it in the top 33% of all 250+ industries.

The Zacks Industry Rank assesses the vigor of our specific industry groups by computing the average Zacks Rank of the individual stocks incorporated in the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Ensure to harness Zacks.com to stay updated with all these stock-shifting metrics, among others, in the next trading sessions.


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