For those who appreciate value investing, NASDAQ:ZM is a compelling option with its solid fundamentals.

Last update: Feb 15, 2024

Uncover the potential of ZOOM VIDEO COMMUNICATIONS-A (NASDAQ:ZM) as our stock screener's choice for an undervalued stock. NASDAQ:ZM maintains a strong financial position and offers an appealing valuation. We'll delve into the specifics below.

Unpacking NASDAQ:ZM's Valuation Rating

ChartMill assigns a Valuation Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing different valuation elements, such as price to earnings and free cash flow, both in absolute terms and relative to the market and industry. In the case of NASDAQ:ZM, the assigned 8 reflects its valuation:

92.42% of the companies in the same industry are more expensive than ZM, based on the Price/Earnings ratio.
ZM's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 26.28.
Based on the Price/Forward Earnings ratio, ZM is valued cheaper than 91.70% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 21.37. ZM is valued slightly cheaper when compared to this.
86.28% 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 91.70% of the companies are valued more expensively.
The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The decent profitability rating of ZM may justify a higher PE ratio.

What does the Profitability looks like for NASDAQ:ZM

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:

ZM has a Return On Assets of 2.52%. This is in the better half of the industry: ZM outperforms 77.26% of its industry peers.
ZM has a better Return On Equity (3.16%) than 77.26% of its industry peers.
ZM's Return On Invested Capital of 3.13% is fine compared to the rest of the industry. ZM outperforms 75.45% 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.
Looking at the Profit Margin, with a value of 5.21%, ZM is in the better half of the industry, outperforming 79.78% of the companies in the same industry.
ZM has a Operating Margin of 6.66%. This is in the better half of the industry: ZM outperforms 77.26% of its industry peers.
In the last couple of years the Operating Margin of ZM has grown nicely.
With a decent Gross Margin value of 75.79%, ZM is doing good in the industry, outperforming 71.12% of the companies in the same industry.

Unpacking NASDAQ:ZM's Health Rating

To gauge a stock's financial health, ChartMill utilizes a Health Rating on a scale of 0 to 10. This comprehensive evaluation encompasses liquidity and solvency, both in absolute terms and in comparison to industry peers. NASDAQ:ZM has earned a 9 out of 10:

An Altman-Z score of 7.85 indicates that ZM is not in any danger for bankruptcy at the moment.
ZM's Altman-Z score of 7.85 is fine compared to the rest of the industry. ZM outperforms 78.70% of its industry peers.
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.
With an excellent Current ratio value of 4.27, ZM belongs to the best of the industry, outperforming 83.75% of the companies in the same industry.
ZM has a Quick Ratio of 4.27. This indicates that ZM is financially healthy and has no problem in meeting its short term obligations.
Looking at the Quick ratio, with a value of 4.27, ZM belongs to the top of the industry, outperforming 83.75% of the companies in the same industry.

Growth Examination for NASDAQ:ZM

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.

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.

Keep in mind

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.