Zoom Video Communications (ZM) Surges Faster Than the Market: Key Facts

In the latest trading session, Zoom Video Communications (ZM) closed at $70.52, moving +0.46% from the previous day. The move outpaced the S&P 500’s daily gain of 0.4%. At the same time, the Dow gained 0.09% and the tech-heavy Nasdaq gained 0.63%.

Year-to-date, shares of the video conferencing company had risen 4.92% over the past month. During the same period, the Computer and Technology sector gained 4.88%, while the S&P 500 gained 3.76%.

Investors will be paying close attention to Zoom Video Communications’ performance in its upcoming earnings release. The company’s earnings per share (EPS) are expected to be $1.31, up 1.55% from the year-ago quarter. At the same time, our most recent consensus estimate is calling for revenue of $1.16 billion, up 2.34% from the prior-year quarter.

ZM’s full-year Zacks Consensus Estimates are calling for earnings of $5.31 per share and revenue of $4.64 billion. These results would represent year-over-year changes of +1.92% and +2.43%, respectively.

It is also important for investors to be aware of any recent changes to analyst estimates for Zoom Video Communications. Recent revisions typically reflect the latest short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company’s business outlook.

Empirical research suggests that these estimate revisions are directly related to upcoming stock price performance. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an 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-ranked stocks having an average since 1988 achieved annual returns of +25%. Over the past 30 days, the Zacks Consensus EPS estimate has moved 0.54% higher. Currently, Zoom Video Communications is ranked #1 (Strong Buy) by Zacks.

In terms of valuation, Zoom Video Communications is currently trading at a Forward P/E ratio of 13.22. Its industry has an average Forward P/E of 32.25, so one might conclude that Zoom Video Communications is trading at a discount comparatively.

Investors should also note that ZM currently has a PEG ratio of 3.12. 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 Internet Software industry currently had an average PEG ratio of 2.09 as of yesterday’s close.

The story continues

The Internet software industry is part of the computer and technology sector. This group has a Zacks Industry Rank of 59, putting it in the top 24% of all 250+ industries.

The strength of our individual industry groups is measured using the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within those groups. Our research shows that the top rated 50% of industries outperform the bottom half by a factor of 2 to 1.

Don’t forget to use Zacks.com to keep an eye on all of these stock moving metrics and others in the coming trading sessions.

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Zoom Video Communications, Inc. (ZM): Free stock analysis report

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