Zoom Video Communications ZM Earnings Expected to Grow: Should You Buy?

Given the state of the company, investors should consider Zoom stock. Admittedly, investors like Ark Invest may have to adjust their expectations. With 2026 just two years away, Ark Invest’s base case estimates are looking increasingly unlikely to come to pass, and it may even fall short of the $700-per-share bear case estimate. Also, 3% revenue growth will probably not inspire growth-oriented investors.

Is Ark Invest correct?

Revenues are projected to reach $1.16 billion, increasing 2.3% from the same quarter last year. Its forward price-to-earnings (P/E) ratio is just under 14, and the price-to-sales (P/S) ratio of less than 5 is just above all-time lows. That valuation positions the stock for a massive surge if the company can stoke a recovery in revenue growth.

Ark Invest has backed estimates up by taking a significant position in the media stock. Zoom makes up almost 7% of its flagship fund, the Ark Innovation ETF, making the Cathie Wood investment its fourth-largest holding. Across all Ark Invest funds, Zoom makes up around 4.5% of the company’s holdings. Zoom even initiated new growth efforts, building out an artificial intelligence (AI)-driven communications ecosystem. Then there is the endorsement of Ark Investment Management’s CEO Cathie Wood, whose bold predictions regarding other tech stocks (like Tesla and Bitcoin) have come to pass. Wood and her team predicted a $1,500-per-share price target for Zoom by 2026, a 22-fold gain from current levels.

Zoom is a member of the information technology sector and operates within the software industry. They include legacy web-based meeting service providers such as Cisco Systems Inc.’s (CSCO) WebEx and LogMeIn Inc.’s GoToMeeting. 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. top 50 cryptocurrency prices coin market cap price charts and historical data 2021 Other competitors are unified communications as a service (UCaaS) and legacy private bank exchange (PBX) providers such as 8×8 Inc. (EGHT), Avaya Holdings Corp. (AVYA), and RingCentral Inc. (RNG). 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. ZM’s industry had an average PEG ratio of 2.41 as of yesterday’s close.

Zoom Video Communications Price Performance

Dimensional Fund Advisors LP now owns 1,365,705 shares of the company’s stock valued at $80,827,000 after purchasing an additional 264,217 shares in the last quarter. CA lifted its stake in Zoom Video Communications by 20.0% in the second quarter. CA now owns 1,280,525 shares of the company’s stock worth $75,794,000 after purchasing an additional 213,575 hands on with the destek v4 vr headset shares during the last quarter. 66.54% of the stock is currently owned by hedge funds and other institutional investors. 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.

Research Reports: ZM

Zoom Video Communications (ZM 4.88%) is a bit of a mystery as a growth stock. 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. The company is headquartered in San Jose, Calif., and has additional offices in more than 15 locations in the United States, Europe, Asia, and Australia. Sign up for MarketBeat All Access to gain access to MarketBeat’s full suite of research tools.

ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or it help desk technician job description template any approach to evaluating individual securities. Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about. Zoom Video Communications‘ top institutional shareholders include FMR LLC (4.04%), State Street Corp (1.98%), Pacer Advisors Inc. (1.78%) and Geode Capital Management LLC (1.49%). Insiders that own company stock include Santiago Subotovsky, Kelly Steckelberg, Velchamy Sankarlingam, Janet Napolitano, Aparna Bawa, Shane Crehan, Jonathan Chadwick, Ryan Azus and Eric S Yuan. So, this combination makes it difficult to conclusively predict that Zoom Video will beat the consensus EPS estimate.

Given that these returns are generally positive, long-term shareholders should be satisfied going into this earnings release. Shares of Zoom Video Communications stock traded up $2.34 during trading hours on Thursday, reaching $81.20. The company’s stock had a trading volume of 3,955,452 shares, compared to its average volume of 3,233,951. The firm has a 50 day moving average price of $73.06 and a 200-day moving average price of $65.32. Zoom Video Communications, Inc. has a one year low of $55.06 and a one year high of $87.15. The stock has a market cap of $24.99 billion, a P/E ratio of 29.10, a P/E/G ratio of 6.64 and a beta of -0.05.

1. Please note that a negative Earnings ESP reading is not indicative of an earnings miss.
2. The company topped consensus revenue estimates each time over this period.
3. Zoom’s latest fiscal year (FY) was FY 2021, which ended Jan. 31, 2021.
4. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release.

Investor Services

Without considering a stock’s valuation, no investment decision can be efficient. In predicting a stock’s future price performance, it’s crucial to determine whether its current price correctly reflects the intrinsic value of the underlying business and the company’s growth prospects. Before a company reveals its earnings, it is vital to take into account any changes in earnings projections. These revisions play a pivotal role in predicting the possible reactions of investors toward the stock. Multiple empirical studies have consistently shown a strong association between trends in earnings estimates and the short-term price movements of a stock. Elastic (ESTC), another stock in the Zacks Internet – Software industry, is expected to report earnings per share of $0.38 for the quarter ended October 2024.