Investors should also note any recent changes to analyst estimates for Zoom Video Communications. Such recent modifications usually signify the changing landscape of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company’s business outlook. In terms of the entire fiscal year, the Zacks Consensus Estimates predict earnings of $5.34 per share and a revenue of $4.64 billion, indicating changes of +2.5% and +2.43%, respectively, from the former year. In addition to that, I don’t think Zoom is currently trading at an attractive-enough valuation — investors who are still excited about the stock may be wise to wait for a larger decline before considering an investment. Here at Zacks, we prioritize appraising the change in the projection of a company’s future earnings over anything else.
For a company like Zoom that has been so tied in investors’ minds to the pandemic, it can be difficult to take a step back and see the forest for the trees. Taken without the noise of the past two years, Zoom is clearly a buy for existing shareholders or those investors looking to start a position. Zoom Video reported revenues of $1.16 billion in the last reported quarter, representing a year-over-year change of +2.1%. While media releases or rumors about a substantial change in a company’s business prospects usually make its stock ‘trending’ and lead to an immediate price change, there are always some fundamental facts that eventually dominate the buy-and-hold decision-making.
Zoom Stock: Buy, Sell, or Hold in 2022?
In predicting a stock’s future price performance, it’s crucial to determine whether its current price correctly reflects the intrinsic value of the underlying business and the company’s growth prospects. Its forward price-to-earnings (P/E) ratio is just under 14, and the price-to-sales (P/S) ratio of less than 5 is just above all-time lows. That valuation positions the stock for a massive surge if the company can stoke a recovery in revenue growth. The investment community will be closely monitoring the performance of Zoom Video Communications in its forthcoming earnings report. The company is scheduled to release its earnings on November 25, 2024. The company is forecasted to report an EPS of $1.31, showcasing a 1.55% upward movement from the corresponding quarter of the prior year.
Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. However, Zoom has rapidly turned into a value stock that returns a respectable level of free-cash-flow growth. If Zoom can start monetizing some of the AI potential Ark Invest sees, it could inspire another bull market in its stock. Still, operating income fell during that period, and much of the gain came from $114 million in «other income,» which why such disparity between unemployment rates in europe consists of income from interest, foreign currency, and marketable securities.
Zoom Video Communications, Inc. (ZM) Is a Trending Stock: Facts to Know Before Betting on It
With growth expected to hit the breaks in the years ahead, the company will likely become less attractive to investors who bought into Zoom’s growth story. Admittedly, investors like Ark Invest may have to adjust their expectations. With 2026 just two years away, Ark Invest’s base case estimates are looking increasingly unlikely to come to pass, and it may even fall short of the $700-per-share bear case estimate. Also, 3% revenue growth will probably not inspire growth-oriented investors. Zoom Video Communications Inc. (ZM) offers a video-first What is trade size communications platform used by millions of people worldwide for both business and personal use.
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. Over the last 30 days, the Zacks Consensus EPS estimate has witnessed an unchanged state. Right now, Zoom Video Communications possesses a Zacks Rank of #2 (Buy).
Zoom Video Communications, Inc. Overview Software – Application / Technology
The Internet – Software industry is part of the Computer and Technology sector. Currently, this industry holds a Zacks Industry Rank of 34, positioning it in the top 14% of all 250+ industries. The latest trading session saw Zoom Video Communications (ZM) ending at $77.75, denoting a -1.49% adjustment from its last day’s close. Elsewhere, the Dow saw a downswing of 0.28%, while the tech-heavy Nasdaq appreciated by 1.04%. Don’t let Zoom’s past success dictate your decision to invest in the company today. Zoom’s management also views international expansion as an important opportunity.
How many shares of Zoom (ZM) stock are there?
- Therefore, you might want to consider some of the key factors that could influence the stock’s performance in the near future.
- The facts discussed here and much other information on Zacks.com might help determine whether or not it’s worthwhile paying attention to the market buzz about Zoom Video.
- Compared to the Zacks Consensus Estimate of $1.15 billion, the reported revenues represent a surprise of +1.22%.
- Admittedly, the company’s results have come nowhere close to matching that expected growth.
- Zoom has provided investors with spectacular growth and returns in the past couple of years; however, I don’t see that continuing into the future.
As Wood and others have stated, Zoom is much more than an online meeting platform. It is a comprehensive communications ecosystem that includes team chat platforms, online whiteboards, VoIP phone service, workspaces, email, and other services. Coming into today, shares of the video-conferencing company had gained 9.37% in the past month. In that same time, the Computer and Technology sector gained 0.18%, while the S&P 500 gained 0.62%.
To that end, Zoom has recently introduced Zoom Phone, Zoom Meetings, Zoom Video Webinars, and Zoom for Home. All successful companies find ways to keep expanding their business in order to create new revenue streams and remain relevant in an ever-changing world. In order to do this, businesses need the cash to invest in research and development and capital improvements. Zoom has the balance sheet to do this and has been very active in rolling out new products. By taking out of the equation the volatility of the past two years and viewing Zoom’s performance on this two-year basis, we see just how remarkable the growth of its business is.
Rivals also include bundled productivity solution providers with video functionality such as Alphabet Inc.’s (GOOGL) Google G Suite and Microsoft Inc.’s (MSFT) Microsoft Teams. Other competitors are unified communications as a service (UCaaS) and legacy private bank exchange (PBX) providers such as 8×8 Inc. (EGHT), Avaya Holdings Corp. (AVYA), and RingCentral Inc. (RNG). Without considering a stock’s valuation, no investment decision can be efficient.
In the case of Zoom Video, the consensus sales estimate of $1.16 billion for the current quarter points to a year-over-year change of +2.3%. The $4.64 billion and $4.76 billion estimates for the current and next fiscal years indicate changes of +2.4% and +2.7%, respectively. While earnings growth is arguably the most superior indicator of a company’s financial health, nothing happens as such if a business isn’t able to grow its revenues. After all, it’s nearly most traded сryptocurrency pairs – best pairs to trade impossible for a company to increase its earnings for an extended period without increasing its revenues. For the next fiscal year, the consensus earnings estimate of $5.24 indicates a change of -1.8% from what Zoom Video is expected to report a year ago. Zoom’s valuation has surely contracted, but it’s still not desirable when observing the company’s peer group.