Zoom Communications (ZM) Beats Stock Market Upswing: What Investors Need to Know

Zoom Communications (ZM) closed the latest trading day at $76.16, indicating a +0.17% change from the previous session's end. This move outpaced the S&P 500's daily gain of 0.06%. At the same time, the Dow added 0.28%, and the tech-heavy Nasdaq lost 0.1%.

Coming into today, shares of the video-conferencing company had gained 1.59% in the past month. In that same time, the Computer and Technology sector lost 5.52%, while the S&P 500 lost 4.29%.

The upcoming earnings release of Zoom Communications will be of great interest to investors. The company's earnings per share (EPS) are projected to be $1.30, reflecting a 3.7% decrease from the same quarter last year. Our most recent consensus estimate is calling for quarterly revenue of $1.16 billion, up 2.03% from the year-ago period.

In terms of the entire fiscal year, the Zacks Consensus Estimates predict earnings of $5.36 per share and a revenue of $4.78 billion, indicating changes of -3.25% and +2.35%, respectively, from the former year.

Investors should also note any recent changes to analyst estimates for Zoom Communications. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. Over the past month, there's been a 0.73% fall in the Zacks Consensus EPS estimate. At present, Zoom Communications boasts a Zacks Rank of #3 (Hold).

In terms of valuation, Zoom Communications is presently being traded at a Forward P/E ratio of 14.19. For comparison, its industry has an average Forward P/E of 26.08, which means Zoom Communications is trading at a discount to the group.

It is also worth noting that ZM currently has a PEG ratio of 8.98. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company's projected earnings growth. The Internet - Software industry had an average PEG ratio of 2.19 as trading concluded yesterday.

The Internet - Software industry is part of the Computer and Technology sector. This industry, currently bearing a Zacks Industry Rank of 90, finds itself in the top 37% echelons of all 250+ industries.

The Zacks Industry Rank is ordered from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow ZM in the coming trading sessions, be sure to utilize Zacks.com.

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This article originally published on Zacks Investment Research (zacks.com).

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