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. 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.
Over the same time frame, O’Neil notes, the Dow Jones Industrial Average showed an average ratio of 15 times trailing 12-month earnings. Zoom Video is set to announce its second-quarter fiscal 2022 financial results after the market closes on Aug. 30. Morgan Stanley analyst Meta Marshall upgraded Zoom Video from an Equal-Weight rating to an Overweight rating and raised the price target from $360 to $400. Prior to founding Zoom, Yuan was corporate vice president of engineering at Cisco, and was a founding engineer and vice president of engineering for web and videoconferencing platform Webex. Yuan then became Cisco’s corporate vice president of engineering for collaboration software. Zoom Phone, a cloud-calling product rolled out in 2019, lets customers set up group internet phone calls without video.
- Now that growth is coming back to earth, the stock has fallen 51% from its high last year.
- Only Zacks Rank stocks included in Zacks hypothetical portfolios at the beginning of each month are included in the return calculations.
- As the coronavirus crisis eases, retaining small businesses as well as corporate accounts will be one key to Zoom’s success.
- The consensus among Wall Street research analysts is that investors should “hold” ZM shares.
- IBD only gives Zoom stock a relative strength rating of 5 out of a possible 99, down from 40 as of August.
Upgrade to MarketBeat All Access to add more stocks to your watchlist. For the October quarter, Zoom Video earned an adjusted $1.29 a share, https://traderoom.info/ up 21% from a year earlier. Zoom Video has built up alliances with the likes of Salesforce.com (CRM), Atlassian (TEAM) and Box (BOX).
Zoom Video Communications Shareholder
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Zoom’s Earnings
For its part, Five9 has posted sales of about $500 million over the last 12 months. The competition is made up of entrenched incumbents and innovative newcomers. Now that growth is coming back to earth, the stock has fallen 51% from its high last year. Despite that, there are several good reasons to think Zoom could stage a rebound. Our experts picked 7 Zacks Rank #1 Strong Buy stocks with the best chance to skyrocket within the next days. The concept behind a 130% increase in the price-to-earnings ratio came from decades of IBD research.
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. The pullback in pandemic-driven demand, in addition to increased competition from massive tech companies like Microsoft and Alphabet, will challenge Zoom’s business moving from here on out. 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.
Analysts polled by FactSet had expected Zoom earnings of $1.09 a share on sales of $1.12 billion. In July 2021, Zoom Video and Five9 (FIVN), which automates call center services, announced a deal to merge. Zacks currently rates Zoom stock a “hold.” A “hold” rating correlates with a projected annualized return of 10.68% over the next one to three months. Zoom Video Communications (ZM -0.48%) rewarded shareholders who bought the stock prior to the pandemic, returning 391% in 2020.
Key Data
ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities. Please follow Chung on Twitter at @SaitoChung and @IBD_DChung for more on growth stocks, buy points, breakouts, sell rules and market insight. As mentioned above, on Sept. 30, 2021, Five9 announced that the two parties had mutually agreed to abandon the deal.
ZM stock holds an Accumulation/Distribution Rating of B-minus. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. Its current rating indicates more funds are buying than selling. Zoom closed its fiscal third quarter with 219,700 enterprise customers, up 5% from the same period last year.
The Zoom IPO in April 2019 raised $752 million, with shares priced at 36. Zoom puts limits on the number of participants in a group call and the length of meetings. Zoom software gets high ratings for ease of use and simplicity following earlier video services that provided jerky images and out-of-sync audio.
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The consensus among 27 analysts reported by the Wall Street Journal is that Zoom is “overweight,” meaning analysts expect its performance to improve. The average target is based on a low target of $207 and high of $571.91, with $299 being hire ico developer the median. Investors should also note that ZM has a PEG ratio of 0.41 right now. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company’s expected earnings growth trajectory.
For that period, the company reported net income of $672.3 million on revenue of $2.7 billion. 450 employees have rated Zoom Video Communications Chief Executive Officer Eric S. Yuan on Glassdoor.com. Eric S. Yuan has an approval rating of 97% among the company’s employees. This puts Eric S. Yuan in the top 30% of approval ratings compared to other CEOs of publicly-traded companies.
A rebound in revenue growth for Zoom stock depends on its success in the corporate market. And the outlook for ZM stock is tied to whether the company morphs into a broader business communications platform. Investors and analysts bullish on Zoom stock argue that video conferencing will only continue to grow, even as people return to in-person interactions.
