Don't overlook NASDAQ:ZM—it's a hidden gem with strong fundamentals and an attractive price tag.

Last update: Nov 9, 2023

Consider ZOOM VIDEO COMMUNICATIONS-A (NASDAQ:ZM) as a top value stock, identified by our stock screening tool. NASDAQ:ZM shines in terms of profitability, solvency, and liquidity, all while remaining very reasonably priced. Let's dive deeper into the analysis.

A Closer Look at Valuation for NASDAQ:ZM

ChartMill employs its own Valuation Rating system for all stocks. This score, ranging from 0 to 10, is determined by evaluating different valuation factors, including price to earnings and free cash flow, both in absolute terms and relative to the market and industry. NASDAQ:ZM has earned a 7 for valuation:

Based on the Price/Earnings ratio, ZM is valued cheaper than 92.03% of the companies in the same industry.
ZM is valuated rather cheaply when we compare the Price/Earnings ratio to 23.46, which is the current average of the S&P500 Index.
ZM's Price/Forward Earnings ratio is rather cheap when compared to the industry. ZM is cheaper than 89.13% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of ZM to the average of the S&P500 Index (18.80), we can say ZM is valued slightly cheaper.
81.16% of the companies in the same industry are more expensive than ZM, based on the Enterprise Value to EBITDA ratio.
Based on the Price/Free Cash Flow ratio, ZM is valued cheaply inside the industry as 88.04% of the companies are valued more expensively.
The decent profitability rating of ZM may justify a higher PE ratio.

Analyzing Profitability Metrics

ChartMill assigns a proprietary Profitability Rating to each stock. The score is computed by evaluating various profitability ratios and margins and ranges from 0 to 10. NASDAQ:ZM was assigned a score of 7 for profitability:

The Return On Assets of ZM (1.59%) is better than 75.72% of its industry peers.
The Return On Equity of ZM (2.02%) is better than 76.81% of its industry peers.
ZM's Return On Invested Capital of 2.17% is fine compared to the rest of the industry. ZM outperforms 76.09% of its industry peers.
The 3 year average ROIC (10.07%) for ZM is well above the current ROIC(2.17%). The reason for the recent decline needs to be investigated.
The Profit Margin of ZM (3.18%) is better than 77.17% of its industry peers.
Looking at the Operating Margin, with a value of 4.41%, ZM is in the better half of the industry, outperforming 75.72% of the companies in the same industry.
ZM's Operating Margin has improved in the last couple of years.
ZM's Gross Margin of 75.62% is fine compared to the rest of the industry. ZM outperforms 71.01% of its industry peers.

Health Analysis for NASDAQ:ZM

ChartMill assigns a proprietary Health Rating to each stock. The score is computed by evaluating various liquidity and solvency ratios and ranges from 0 to 10. NASDAQ:ZM was assigned a score of 9 for health:

An Altman-Z score of 7.55 indicates that ZM is not in any danger for bankruptcy at the moment.
ZM has a Altman-Z score of 7.55. This is amongst the best in the industry. ZM outperforms 82.97% of its industry peers.
There is no outstanding debt for ZM. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
ZM has a Current Ratio of 3.99. This indicates that ZM is financially healthy and has no problem in meeting its short term obligations.
The Current ratio of ZM (3.99) is better than 80.80% of its industry peers.
A Quick Ratio of 3.99 indicates that ZM has no problem at all paying its short term obligations.
ZM has a better Quick ratio (3.99) than 80.80% of its industry peers.

How do we evaluate the Growth for NASDAQ:ZM?

A key component of ChartMill's stock assessment is the Growth Rating, which spans from 0 to 10. This rating evaluates diverse growth factors, such as EPS and revenue growth, considering both past performance and future projections. NASDAQ:ZM has received a 5 out of 10:

Measured over the past years, ZM shows a very strong growth in Earnings Per Share. The EPS has been growing by 131.99% on average per year.
Measured over the past years, ZM shows a very strong growth in Revenue. The Revenue has been growing by 96.10% on average per year.

Our Decent Value screener lists more Decent Value stocks and is updated daily.

Our latest full fundamental report of ZM contains the most current fundamental analsysis.

Disclaimer

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.