Investors should also note that ZM has a PEG ratio of 0.4 right now. 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. As the market closed yesterday, the Internet – Software industry was having an average regresion y clasificacion PEG ratio of 1.85. We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second ‘steady growth’ period.

With revenue and earnings growth expected to pull back in the years ahead, I wouldn’t be surprised to see growth-oriented investors exit their positions in Zoom stock. The slowdown in growth, combined with ongoing macroeconomic headwinds and geopolitical concerns, will put additional downward pressure on Zoom’s valuation for the foreseeable future. On the earnings front, Wall Street analysts are forecasting an average annualized growth of 28% over the next five years up to an earnings per share of $6.21 per share in fiscal year 2026.

1. This model considers these estimate changes and provides a simple, actionable rating system.
2. We aim to bring you long-term focused analysis driven by fundamental data.
3. This is still a much higher price than it was trading at the same point last year.
4. Zoom Meetings happen in the Zoom app, and can be started and shared by anyone; these meetings can even be started for free via the app, if you have it installed, or via the Zoom web site.
5. In that report, analysts expect Zoom Video Communications to post earnings of $1.15 per share.

Zoom Video Communications the company that provides video communication tools, and it is about to release its third quarter earnings report. Analysts predict that the company will make $1.08 per share and increase its revenue to $1.12 billion. With more people going back to their offices, Zoom has been working on new tools that use artificial intelligence to compete with its rivals. In the future, the company plans to enter the Contact Center and Docs markets, where it will face competition from Microsoft Office and Google Docs.

Zoom Stock Scores an Upgrade Ahead of Earnings. Analyst Cites More Stable Usage.

Certain Zacks Rank stocks for which no month-end price was available, pricing information was not collected, or for certain other reasons have been excluded from these return calculations. Zacks may license the Zacks Mutual Fund rating provided herein to third parties, including but not limited to the issuer. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company’s expected earnings growth rate into account.

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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 https://forexhero.info/ Inc. (EGHT), Avaya Holdings Corp. (AVYA), and RingCentral Inc. (RNG). Basic is free and lets you host meetings with up to 100 participants, with a limit of 40 minutes per meeting. You can also have an unlimited number of one-on-one meetings. All of these meetings can be audio-only or video conferences.

This flexibility results in the ability to collaborate efficiently on projects for work or education. Zoom Meetings are the audio and video conferences that allow two or more people to communicate online. “As a result of the pandemic, we are in a period of great public adoption and feature velocity in videoconferencing,” he said. “In the short term, Zoom wants to make meetings more engaging and less stressful, which explains the AR features added recently. Zoom wants to connect with more enterprise systems to remove friction between meetings and work.

Plus the zoom out option is only available to undo a previous zoom in operation. Zoom Video Communications ZM closed the most recent trading day at $61.35, moving +0.05% from the previous trading session. The stock’s performance was behind the S&P 500’s daily gain of 0.13%. Elsewhere, the Dow gained 0.13%, while the tech-heavy Nasdaq lost 0.32%.

Given the expected slowdown in Zoom’s growth, I think it’s safe to say that the company is still trading at expensive valuation multiples. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation.

In that report, analysts expect Zoom Video Communications to post earnings of $1.15 per share. Our most recent consensus estimate is calling for quarterly revenue of $1.13 billion, up 0.96% from the year-ago period. The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is US$29b. The last step is to then divide the equity value by the number of shares outstanding.

Zoom Video Communications News

Revenue and earnings growth remain strong — analysts are forecasting revenue and earnings per share to grow by 54% and 46% year over year up to $4.1 billion and $4.87 per share in fiscal year 2022, respectively. Zoom has almost no debt, boasting a debt-to-equity ratio of 2% and a strong cash position of $1.3 billion. The company also grew free cash flow by over 1,100% in fiscal year 2021 up to $1.4 billion. The significant climb in free cash flow was a result of superb revenue growth stemming from pandemic-driven demand. Zoom’s upcoming earnings report will give us a better idea of how the company is doing financially and how it has been affected by the post-pandemic environment.

We do this to reflect that growth tends to slow more in the early years than it does in later years. Zoom is currently trading at an overvalued rate, with its 12-month-trailing P/E ratio​​ approximately 444x times its EPS. However, if the company keeps building upon its financial results and gains market share in the video conferencing industry, it could result in a promising future for the relatively new company. At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system.

Zoom Video Communications Inc at Barclays Global Technology Conference Transcript

Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1. Zoom Video Communications (ZM Quick QuoteZM – Free Report) closed the most recent trading day at $61.32, moving -1.29% from the previous trading session. The stock’s performance was behind the S&P 500’s daily loss of 0.6%. At the same time, the Dow lost 0.17%, and the tech-heavy Nasdaq lost 0.92%. You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security.

As the coronavirus crisis eases, retaining small businesses as well as corporate accounts will be one key to Zoom’s success. For customers with one to 10 employees, renewals are expected to slow as the economy reopens and shelter-in-place orders lift. Sales growth slowed for the ninth-straight quarter as the company adjusts to slower product demand in the post-coronavirus emergency era. Analysts have debated when decelerating sales will hit a bottom. At its annual Zoomtopia user conference in early October, the company said it will not charge customers for use of its AI Companion. Its capabilities include meeting/chat summaries and smart recordings.

Zoom Video Communications, Inc. provides unified communications platform in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. The company was formerly known as Zoom Communications, Inc. and changed its name to Zoom Video Communications, Inc. in May 2012. The company was incorporated in 2011 and is headquartered in San Jose, California. Zoom shares have lost over 60% of their value in the past six months as part of a broader tech sell-off in response to rising interest rates and inflation.

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People use it to make phone calls or to participate in video conference meetings. Because it’s part of Microsoft’s suite of office-worthy apps, Teams already has a toe-hold in companies that either didn’t have a collaboration platform in place already or are looking to limit application sprawl. And it’s worked to help IT admins better manage Teams video chats, again with an eye on enterprise users. Zoom’s Pro plan costs $15/host/month and allows up to 100 users per call.