NEW YORK - Zoom Video Communications (NASDAQ:ZM) experienced a slight decline in its share price on Monday, closing at $61.54, which represents a 0.84% drop from its previous close. This performance was weaker compared to the minor loss of 0.08% in the S&P 500 on the same day. The Dow managed to edge up by 0.16%, while the Nasdaq saw a decrease of 0.22%. Over the past month, Zoom's stock has not kept pace with broader market trends, shedding 1.1% in value compared to a 2.9% gain in the Computer and Technology sector and a 1.42% increase in the S&P 500.
Investors and analysts are looking ahead to Zoom's earnings announcement scheduled for November 20, 2023, with expectations set for an earnings per share (EPS) of $1.08, a slight improvement of 0.93% from the previous year. Revenue forecasts suggest a modest year-over-year growth of 1.47%, targeting $1.12 billion for the quarter. For the fiscal year, consensus estimates predict earnings of $4.66 per share and total revenue reaching approximately $4.49 billion, marking increases of 6.64% and 2.24%, respectively.
Despite the recent underperformance in share price, analysis on Zoom's financial outlook appears cautiously optimistic regarding the company's operational efficiency and potential profitability. The stability of Zoom's Consensus EPS estimate over the last 30 days has contributed to its current Zacks Rank of #3 (Hold). The Zacks Rank system has historically been a reliable indicator, with stocks rated as #1 achieving an average annual return of +25% since 1988.
Zoom's valuation metrics also present an interesting picture; its Forward Price-to-Earnings (P/E) ratio stands at 13.31, significantly lower than the industry average of 33.32. Moreover, its PEG ratio is positioned at 0.4, which is considerably below the industry standard of 1.45, suggesting that the stock could be undervalued relative to its growth prospects.
The Internet - Software industry, where Zoom is categorized, holds a favorable position with Zacks Industry Rank at number 59, placing it within the top-performing quartile of all industries analyzed. Historical data from Zacks indicates that industries highly rated like this tend to double the performance of those ranked in the bottom half.
As investors await Zoom's forthcoming financial results, they may also consider guidance from Zacks' free stock analysis report and its compilation titled '7 Best Stocks for the Next 30 Days', which can serve as a resource for future investment decisions.
InvestingPro Insights
As per InvestingPro data, Zoom Video Communications (NASDAQ:ZM) boasts a robust financial position with a market cap of $18.52B and a P/E ratio of 128.43 as of Q2 2024. The company's revenue for the last twelve months as of Q2 2024 was $4463.74M, reflecting a growth of 3.92%. Zoom's gross profit margin stood at a strong 75.62% during the same period.
From the InvestingPro Tips, it's worth noting that Zoom holds more cash than debt on its balance sheet, an indicator of financial health. Additionally, analysts predict that the company will be profitable this year, a trend supported by its high earnings quality with free cash flow exceeding net income. Despite a declining trend in earnings per share, Zoom's stock generally trades with low price volatility, providing some stability for investors. For more in-depth analysis and tips, consider exploring InvestingPro's comprehensive suite of tools and resources, which includes additional tips for over thousands of companies.
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