Zoom Video Communications (ZM) Stock Sinks As Market Gains: What You Should Know

Zoom Video Communications (ZM) closed at $348.41 in the latest trading session, marking a -1.92% move from the prior day. This move lagged the S&P 500's daily gain of 0.26%.

Prior to today's trading, shares of the video-conferencing company had lost 1.86% over the past month. This has lagged the Computer and Technology sector's gain of 2.31% and the S&P 500's gain of 2.37% in that time.

ZM will be looking to display strength as it nears its next earnings release, which is expected to be August 30, 2021. In that report, analysts expect ZM to post earnings of $1.16 per share. This would mark year-over-year growth of 26.09%. Our most recent consensus estimate is calling for quarterly revenue of $990.32 million, up 49.25% from the year-ago period.

ZM's full-year Zacks Consensus Estimates are calling for earnings of $4.66 per share and revenue of $3.99 billion. These results would represent year-over-year changes of +39.52% and +50.34%, respectively.

Any recent changes to analyst estimates for ZM should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. ZM is currently a Zacks Rank #4 (Sell).

Valuation is also important, so investors should note that ZM has a Forward P/E ratio of 76.31 right now. For comparison, its industry has an average Forward P/E of 63.11, which means ZM is trading at a premium to the group.

It is also worth noting that ZM currently has a PEG ratio of 4.59. 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. The Internet - Software industry currently had an average PEG ratio of 3.73 as of yesterday's close.

The Internet - Software industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 210, putting it in the bottom 18% of all 250+ industries.

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

You can find more information on all of these metrics, and much more, on Zacks.com.

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