NASDAQ:ZM: good value for what you're paying.

Last update: Dec 27, 2023

Our stock screening tool has pinpointed ZOOM VIDEO COMMUNICATIONS-A (NASDAQ:ZM) as an undervalued stock option. NASDAQ:ZM retains a strong financial foundation and an attractive price tag. Let's delve into the specifics below.

How do we evaluate the Valuation for NASDAQ:ZM?

ChartMill provides a Valuation Rating to every stock, ranging from 0 to 10. This rating assesses various valuation aspects, comparing price to earnings and cash flows, while considering factors like profitability and growth. NASDAQ:ZM boasts a 7 out of 10:

90.36% of the companies in the same industry are more expensive than ZM, based on the Price/Earnings ratio.
ZM is valuated rather cheaply when we compare the Price/Earnings ratio to 26.11, which is the current average of the S&P500 Index.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ZM indicates a rather cheap valuation: ZM is cheaper than 88.93% of the companies listed in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 21.02. ZM is valued slightly cheaper when compared to this.
81.79% 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 cheaper than 87.86% of the companies in the same industry.
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
ZM has a very decent profitability rating, which may justify a higher PE ratio.

Exploring NASDAQ:ZM's Profitability

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NASDAQ:ZM, the assigned 7 is noteworthy for profitability:

ZM has a Return On Assets of 2.52%. This is in the better half of the industry: ZM outperforms 76.43% of its industry peers.
Looking at the Return On Equity, with a value of 3.16%, ZM is in the better half of the industry, outperforming 76.79% of the companies in the same industry.
ZM has a Return On Invested Capital of 3.13%. This is in the better half of the industry: ZM outperforms 75.36% 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.
ZM's Profit Margin of 5.21% is fine compared to the rest of the industry. ZM outperforms 79.29% of its industry peers.
The Operating Margin of ZM (6.66%) is better than 77.86% of its industry peers.
ZM's Operating Margin has improved in the last couple of years.
ZM has a better Gross Margin (75.79%) than 71.07% of its industry peers.

Evaluating Health: NASDAQ:ZM

ChartMill assigns a Health Rating to every stock. This score ranges from 0 to 10 and evaluates the different health aspects like liquidity and solvency, both absolutely, but also relative to the industry peers. NASDAQ:ZM scores a 9 out of 10:

An Altman-Z score of 8.82 indicates that ZM is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 8.82, ZM belongs to the top of the industry, outperforming 80.36% of the companies in the same industry.
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 4.27. This indicates that ZM is financially healthy and has no problem in meeting its short term obligations.
The Current ratio of ZM (4.27) is better than 83.57% of its industry peers.
A Quick Ratio of 4.27 indicates that ZM has no problem at all paying its short term obligations.
ZM has a better Quick ratio (4.27) than 83.57% of its industry peers.

Growth Analysis 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:

ZM shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 12.84%, which is quite good.
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.

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

Keep in mind

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.