Despite its impressive fundamentals, NASDAQ:ZM remains undervalued.

Last update: May 22, 2024

ZOOM VIDEO COMMUNICATIONS-A (NASDAQ:ZM) has caught the attention of our stock screener as a great value stock. NASDAQ:ZM excels in profitability, solvency, and liquidity, all while being very reasonably priced. Let's delve into the details.

Evaluating Valuation: NASDAQ:ZM

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:

The Price/Earnings ratio is 11.83, which indicates a very decent valuation of ZM.
Compared to the rest of the industry, the Price/Earnings ratio of ZM indicates a rather cheap valuation: ZM is cheaper than 91.64% of the companies listed in the same industry.
The average S&P500 Price/Earnings ratio is at 28.52. ZM is valued rather cheaply when compared to this.
Based on the Price/Forward Earnings ratio, ZM is valued cheaper than 88.73% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 20.13. ZM is valued slightly cheaper when compared to this.
Based on the Enterprise Value to EBITDA ratio, ZM is valued cheaply inside the industry as 92.73% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, ZM is valued cheaply inside the industry as 91.27% of the companies are valued more expensively.
The decent profitability rating of ZM may justify a higher PE ratio.

Evaluating Profitability: NASDAQ:ZM

ChartMill's Profitability Rating offers a unique perspective on stock analysis, providing scores from 0 to 10. These ratings consider a wide range of profitability metrics and margins, both in comparison to industry peers and on their own merits. For NASDAQ:ZM, the assigned 7 is a significant indicator of profitability:

With an excellent Return On Assets value of 6.42%, ZM belongs to the best of the industry, outperforming 83.27% of the companies in the same industry.
ZM's Return On Equity of 7.95% is fine compared to the rest of the industry. ZM outperforms 79.27% of its industry peers.
ZM has a better Return On Invested Capital (4.33%) than 75.64% of its industry peers.
The Profit Margin of ZM (14.08%) is better than 84.36% of its industry peers.
ZM's Operating Margin of 13.21% is amongst the best of the industry. ZM outperforms 85.09% of its industry peers.
In the last couple of years the Operating Margin of ZM has grown nicely.
The Gross Margin of ZM (76.35%) is better than 72.36% of its industry peers.

Unpacking NASDAQ:ZM's Health Rating

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 8 out of 10:

ZM has an Altman-Z score of 7.96. 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 7.96, ZM belongs to the top of the industry, outperforming 81.09% 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 4.50. This indicates that ZM is financially healthy and has no problem in meeting its short term obligations.
The Current ratio of ZM (4.50) is better than 85.09% of its industry peers.
ZM has a Quick Ratio of 4.50. This indicates that ZM is financially healthy and has no problem in meeting its short term obligations.
ZM has a Quick ratio of 4.50. This is amongst the best in the industry. ZM outperforms 85.09% of its industry peers.

Growth Insights: NASDAQ:ZM

To evaluate a stock's growth potential, ChartMill utilizes a Growth Rating on a scale of 0 to 10. This comprehensive assessment considers various growth aspects, including historical and estimated EPS and revenue growth. NASDAQ:ZM has achieved a 5 out of 10:

ZM shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 20.00%, which is quite impressive.
The Earnings Per Share has been growing by 16.09% on average over the past years. This is quite good.
Measured over the past years, ZM shows a very strong growth in Revenue. The Revenue has been growing by 68.78% 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 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.