NASDAQ:ZM is probably undervalued for the fundamentals it is displaying.

Last update: Jan 25, 2024

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.

Looking at the Valuation

ChartMill assigns a Valuation Rating to every stock. This score ranges from 0 to 10 and evaluates the different valuation aspects and compares the price to earnings and cash flows, while taking into account profitability and growth. NASDAQ:ZM scores a 7 out of 10:

Compared to the rest of the industry, the Price/Earnings ratio of ZM indicates a rather cheap valuation: ZM is cheaper than 91.01% of the companies listed in the same industry.
The average S&P500 Price/Earnings ratio is at 25.83. ZM is valued slightly cheaper when compared to this.
89.93% of the companies in the same industry are more expensive than ZM, based on the Price/Forward Earnings ratio.
ZM's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 20.78.
ZM's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. ZM is cheaper than 84.53% of the companies in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of ZM indicates a rather cheap valuation: ZM is cheaper than 89.57% of the companies listed 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.

Profitability Insights: NASDAQ:ZM

ChartMill utilizes a Profitability Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of profitability ratios and margins, both in absolute terms and in comparison to industry peers. NASDAQ:ZM has earned a 7 out of 10:

ZM has a Return On Assets of 2.52%. This is in the better half of the industry: ZM outperforms 76.98% of its industry peers.
ZM has a better Return On Equity (3.16%) than 76.98% of its industry peers.
ZM has a Return On Invested Capital of 3.13%. This is in the better half of the industry: ZM outperforms 75.54% 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 has a better Profit Margin (5.21%) than 79.50% of its industry peers.
Looking at the Operating Margin, with a value of 6.66%, ZM is in the better half of the industry, outperforming 78.06% of the companies in the same industry.
ZM's Operating Margin has improved in the last couple of years.
ZM has a better Gross Margin (75.79%) than 70.86% of its industry peers.

Health Assessment of NASDAQ:ZM

ChartMill employs its own Health Rating for stock assessment. This rating, ranging from 0 to 10, is calculated by examining various liquidity and solvency ratios. In the case of NASDAQ:ZM, the assigned 9 reflects its health status:

ZM has an Altman-Z score of 8.32. This indicates that ZM is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 8.32, ZM belongs to the top of the industry, outperforming 82.37% of the companies in the same industry.
ZM has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the 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.
ZM's Current ratio of 4.27 is amongst the best of the industry. ZM outperforms 83.09% of its industry peers.
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 83.09% of the companies in the same industry.

ChartMill's Evaluation of Growth

ChartMill assigns a Growth Rating to each stock, ranging from 0 to 10. This rating is determined by analyzing different growth elements, including EPS and revenue growth, spanning both historical and future figures. In the case of NASDAQ:ZM, the assigned 5 reflects its growth potential:

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.
ZM shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 131.99% yearly.
ZM shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 96.10% yearly.

Every day, new Decent Value stocks can be found on ChartMill in our Decent Value screener.

For an up to date full fundamental analysis you can check the fundamental report of ZM

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.