Zoom Video Communications (ZM) Stock Drops Despite Market Gains: Important Facts to Note

In the latest trading session, Zoom Video Communications (ZM) closed at $85.04, marking a -1.48% move from the previous day. The stock's change was less than the S&P 500's daily gain of 0.02%. Meanwhile, the Dow gained 0.11%, and the Nasdaq, a tech-heavy index, lost 0.26%.

Shares of the video-conferencing company have appreciated by 26.16% over the course of the past month, outperforming the Computer and Technology sector's gain of 3.61% and the S&P 500's gain of 2.99%.

Analysts and investors alike will be keeping a close eye on the performance of Zoom Video Communications in its upcoming earnings disclosure. The company's earnings report is set to go public on November 25, 2024. The company is forecasted to report an EPS of $1.30, showcasing a 0.78% upward movement from the corresponding quarter of the prior year. Meanwhile, our latest consensus estimate is calling for revenue of $1.16 billion, up 2.34% from the prior-year quarter.

Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $5.31 per share and revenue of $4.64 billion, indicating changes of +1.92% and +2.43%, respectively, compared to the previous year.

Investors should also note any recent changes to analyst estimates for Zoom Video Communications. Recent revisions tend to reflect the latest near-term business trends. Hence, positive alterations in estimates signify analyst optimism regarding the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. Zoom Video Communications is holding a Zacks Rank of #2 (Buy) right now.

Valuation is also important, so investors should note that Zoom Video Communications has a Forward P/E ratio of 16.25 right now. Its industry sports an average Forward P/E of 32.89, so one might conclude that Zoom Video Communications is trading at a discount comparatively.

It is also worth noting that ZM currently has a PEG ratio of 3.84. 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. The Internet - Software industry currently had an average PEG ratio of 2.46 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. This industry, currently bearing a Zacks Industry Rank of 45, finds itself in the top 18% echelons of all 250+ industries.

The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Keep in mind to rely on Zacks.com to watch all these stock-impacting metrics, and more, in the succeeding trading sessions.

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