NASDAQ:ZM is an undervalued gem with solid fundamentals.

Last update: Dec 5, 2023

Discover ZOOM VIDEO COMMUNICATIONS-A (NASDAQ:ZM)—an undervalued stock our stock screener has picked out. NASDAQ:ZM demonstrates solid fundamentals, including health and profitability, all while staying attractively priced. Let's explore the details.

Understanding NASDAQ:ZM's Valuation Score

ChartMill assigns a proprietary Valuation Rating to each stock. The score is computed by evaluating various valuation aspects, like price to earnings and free cash flow, both absolutely as relative to the market and industry. NASDAQ:ZM was assigned a score of 7 for valuation:

ZM's Price/Earnings ratio is rather cheap when compared to the industry. ZM is cheaper than 91.07% of the companies in the same industry.
ZM's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 25.02.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ZM indicates a rather cheap valuation: ZM is cheaper than 87.86% of the companies listed in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 20.08, ZM is valued a bit cheaper.
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ZM indicates a rather cheap valuation: ZM is cheaper than 84.64% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, ZM is valued cheaply inside the industry as 88.21% 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:

With a decent Return On Assets value of 2.52%, ZM is doing good in the industry, outperforming 77.14% of the companies in the same industry.
Looking at the Return On Equity, with a value of 3.16%, ZM is in the better half of the industry, outperforming 77.86% of the companies in the same industry.
ZM has a better Return On Invested Capital (3.13%) than 76.79% of its industry peers.
The last Return On Invested Capital (3.13%) for ZM is well below the 3 year average (10.07%), which needs to be investigated, but indicates that ZM had better years and this may not be a problem.
The Profit Margin of ZM (5.21%) is better than 79.64% of its industry peers.
ZM has a better Operating Margin (6.66%) than 78.57% of its industry peers.
In the last couple of years the Operating Margin of ZM has grown nicely.
Looking at the Gross Margin, with a value of 75.79%, ZM is in the better half of the industry, outperforming 71.07% of the companies in the same industry.

Assessing Health Metrics for NASDAQ:ZM

Every stock is evaluated by ChartMill, receiving a Health Rating on a scale of 0 to 10. This assessment considers different health aspects, including liquidity and solvency, both in absolute terms and relative to industry peers. NASDAQ:ZM has achieved a 9 out of 10:

An Altman-Z score of 8.24 indicates that ZM is not in any danger for bankruptcy at the moment.
ZM has a Altman-Z score of 8.24. This is amongst the best in the industry. ZM outperforms 82.14% 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.
A Current Ratio of 4.27 indicates that ZM has no problem at all paying its short term obligations.
Looking at the Current ratio, with a value of 4.27, ZM belongs to the top of the industry, outperforming 82.14% of the companies in the same industry.
A Quick Ratio of 4.27 indicates that ZM has no problem at all paying its short term obligations.
Looking at the Quick ratio, with a value of 4.27, ZM belongs to the top of the industry, outperforming 82.14% of the companies in the same industry.

Growth Analysis for NASDAQ:ZM

ChartMill assigns a proprietary Growth Rating to each stock. The score is computed by evaluating various growth aspects, like EPS and revenue growth. We take into account the history as well as the estimated future numbers. NASDAQ:ZM was assigned a score of 5 for growth:

The Earnings Per Share has grown by an nice 12.84% over the past year.
The Earnings Per Share has been growing by 131.99% on average over the past years. This is a very strong growth
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.

More Decent Value stocks can be found in our Decent Value screener.

Check the latest full fundamental report of ZM for a complete fundamental analysis.

Keep in mind

This article should in no way be interpreted as advice in any way. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.