Zoom Video Communications (ZM) has recently been on Zacks.com’s list of the most searched stocks. Therefore, you might want to consider some of the key factors that could influence the stock’s performance in the near future. As with any stocks you’re considering for your portfolio, make sure you understand the business you’re buying and whether it fits into the basket of stocks you’re building before you commit your hard-earned capital. Zoom launched its artificial intelligence (AI)-powered assistant Zoom AI companion in 2023, and a new AI-powered collaboration platform called Zoom Workplace in 2024. Zoom has been faced with headwinds as growth has normalized in recent years from pandemic heights, and it’s had to slash its workforce. In 2017, Zoom hit a $1 billion valuation after raising $100 million in Series D funding from Sequoia Capital.
Is Trending Stock Zoom Communications, Inc. (ZM) a Buy Now?
In the quarter, 4,192 customers contributed more than $100,000 in trailing-12-month revenue, up 8% from the same quarter last fiscal year. New AI products include Zoom Virtual Agent, Zoom Revenue Accelerator, and Zoom AI Companion. Zoom Virtual Agent is a self-service chatbot that can handle a wide range of issues, including complex customer problems, and an AI virtual voice agent that enables self-service voice calls. The Zoom Revenue Accelerator uses machine learning algorithms to support better customer interactions, communication, and improve the performance of sales teams.
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And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors’ interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. For the current fiscal year, the consensus earnings estimate of $5.31 points to a change of +1.9% from the prior year. The consensus earnings estimate of $5.31 for the current fiscal year indicates a year-over-year change of +1.9%.
- After all, it’s nearly impossible for a company to increase its earnings for an extended period without increasing its revenues.
- Zoom Video is expected to post earnings of $1.30 per share for the current quarter, representing a year-over-year change of +0.8%.
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- The $4.64 billion and $4.76 billion estimates for the current and next fiscal years indicate changes of +2.4% and +2.7%, respectively.
- If you don’t want to buy whole shares of Zoom, you may decide to invest in the stock through an exchange-traded fund (ETF).
The bottom line on Zoom Video Communications
If you want to know the ins and outs of how to invest in Zoom stock, whether or not it’s currently profitable, and how the business is doing, keep on reading. The first version of Zoom Meetings allowed up to 25 participants per conference. By the end of Zoom’s first month in business, it already had close to half a million users; a few months later, that figure was up to 1 million users.
Zoom Video Communications A Dividend Calendar
With more than a decade Forex paper trading in business under its belt, Zoom is also much more than a software business, although Zoom Meetings remains a core part of the business and a market leader in videoconferencing solutions. Besides products like Zoom Phone and other workplace tools and solutions, its AI investments could drive meaningful growth for the business over the next five to 10 years. Even as Zoom’s trajectory has normalized from the triple-digit growth figures it was reporting several years ago and investors have displayed more apathy towards the stock over the last couple of years, this is also a far more mature business than five or six years ago. Investors who want to put cash into the tech stock space can certainly still find a lot to like about this business, especially because it’s still in strong financial shape and making steady investments in the world of artificial intelligence. While the business is maturing and may not witness pandemic-level growth again, the stock could still make an attractive addition for some investors with a well-diversified portfolio.
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With an impressive externally audited track record, our proprietary stock rating tool — the Zacks Rank — is a more conclusive indicator of a stock’s near-term price performance, as it effectively harnesses the power of earnings estimate revisions. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #2 (Buy) for Zoom Video. We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends.
By September 2013, Zoom raised a Series B round of funding to the tune of $6.5 million and had 3 million daily participants using its meeting software. Compared to the Zacks Consensus Estimate of $1.15 billion, the reported revenues represent a surprise of +1.22%. While media releases or rumors about a substantial change in a company’s business prospects usually make its stock ‘trending’ and lead to an immediate price change, there are always some fundamental facts that eventually dominate the buy-and-hold decision-making. As long as you’re not expecting pandemic-era returns and want to invest in Zoom stock for its more mature business potential, there’s a lot for investors to like about this stock. The pandemic also marked Zoom’s first foray into selling hardware products, with offerings like Zoom Rooms and Zoom Phone becoming available to customers who could pay a monthly subscription for hardware and accompanying services. Here at Zacks, we prioritize appraising the change in the projection of a company’s future earnings over anything else.
If you have received this message in error, please contact our support team at Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. Looking ahead, Zoom’s strategic initiatives revolve around becoming an AI-first company, with a focus on its AI Companion tool, which is driving increased productivity for customers. If you want to buy Zoom stock, you can easily add shares to your portfolio.
It has a lot of free users to monetize
- As with any stocks you’re considering for your portfolio, make sure you understand the business you’re buying and whether it fits into the basket of stocks you’re building before you commit your hard-earned capital.
- Analysts project an EPS of $1.43, reflecting a 3.62% increase from last year, while concerns about growth and competition linger.
- New AI products include Zoom Virtual Agent, Zoom Revenue Accelerator, and Zoom AI Companion.
- Many investors are already familiar with that boom-and-bust story, so today I’ll focus on three other aspects of Zoom’s business that also deserve their attention.
- Over the last 30 days, the Zacks Consensus Estimate has changed +0.2%.
For Zoom Video, the consensus sales estimate for the current quarter of $1.16 billion indicates a year-over-year change of +2.3%. For the current and next fiscal years, $4.64 billion and $4.76 billion estimates indicate +2.4% and +2.7% changes, respectively. The company beat consensus EPS estimates in each of the trailing four quarters.
In the spring of 2012, the company relaunched as Zoom, and by September of that year, it had introduced a beta version of its software that could host conferences with as many as 15 participants. In 2013, Zoom officially released Zoom Meetings to the public after raising $6 million in a Series A round of funding. In its latest quarter, Cisco’s collaboration revenue — which includes Webex — fell 12% year over year and marked its fourth consecutive quarter of top-line declines.
Here’s Why Zoom Communications (ZM) is a Strong Growth Stock
Zoom Video reported revenues of $1.16 billion in the last reported quarter, representing a year-over-year change of +2.1%. While earnings growth is arguably the most superior indicator of a company’s financial health, nothing happens as such if a business isn’t able to grow its revenues. After all, it’s nearly impossible for a company to increase its earnings for an extended period without increasing its revenues.
For the next fiscal year, the consensus earnings estimate of $5.23 indicates a change of -1.5% from what Zoom Video is expected to report a year ago. No investment decision can be efficient without considering a stock’s valuation. Whether a stock’s current price rightly reflects the intrinsic value of the underlying business and the company’s growth prospects is an essential determinant of its future price performance. Those new features include Zoom Scheduler, which schedules meetings with people outside an organization; Intelligent Director, which uses AI and multiple cameras to capture the clearest images and angles; and its Zoom Virtual Agent chatbot for customer support.
