Zoom Video Communications (ZM) Gains But Lags Market: What You Should Know

Zoom Video Communications (ZM Free Report) closed the most recent trading day at $264.49, moving +0.3% from the previous trading session. The stock lagged the S&P 500’s daily gain of 0.39%. Elsewhere, the Dow gained 0.15%, while the tech-heavy Nasdaq lost 0.03%.

Heading into today, shares of the video-conferencing company had lost 3.84% over the past month, lagging the Computer and Technology sector’s gain of 5.55% and the S&P 500’s gain of 4.82% in that time.

Investors will be hoping for strength from ZM as it approaches its next earnings release, which is expected to be November 22, 2021. The company is expected to report EPS of $1.09, up 10.1% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $1.02 billion, up 31.28% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $4.80 per share and revenue of $4.02 billion. These totals would mark changes of +43.71% and +51.52%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for ZM. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company’s business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. ZM is holding a Zacks Rank of #3 (Hold) right now.

Looking at its valuation, ZM is holding a Forward P/E ratio of 55. This valuation marks a discount compared to its industry’s average Forward P/E of 80.7.

Meanwhile, ZM’s PEG ratio is currently 2.64. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company’s expected earnings growth rate. The Internet – Software industry currently had an average PEG ratio of 4.25 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 195, which puts it in the bottom 24% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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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