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

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.

Valuation Insights: 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:

• Based on the Price/Earnings ratio of 11.21, the valuation of ZM can be described as reasonable.
• 91.30% of the companies in the same industry are more expensive than ZM, based on the Price/Earnings ratio.
• ZM is valuated cheaply when we compare the Price/Earnings ratio to 28.40, which is the current average of the S&P500 Index.
• A Price/Forward Earnings ratio of 11.51 indicates a reasonable valuation of ZM.
• Based on the Price/Forward Earnings ratio, ZM is valued cheaply inside the industry as 89.13% of the companies are valued more expensively.
• ZM is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 20.03, which is the current average of the S&P500 Index.
• Based on the Enterprise Value to EBITDA ratio, ZM is valued cheaply inside the industry as 96.38% of the companies are valued more expensively.
• Compared to the rest of the industry, the Price/Free Cash Flow ratio of ZM indicates a rather cheap valuation: ZM is cheaper than 92.75% of the companies listed in the same industry.
• ZM has a very decent profitability rating, which may justify a higher PE ratio.

Looking at the 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:

• With an excellent Return On Assets value of 8.14%, ZM belongs to the best of the industry, outperforming 86.23% of the companies in the same industry.
• Looking at the Return On Equity, with a value of 10.10%, ZM belongs to the top of the industry, outperforming 83.33% of the companies in the same industry.
• ZM has a Return On Invested Capital of 5.54%. This is amongst the best in the industry. ZM outperforms 80.07% of its industry peers.
• ZM's Profit Margin of 18.37% is amongst the best of the industry. ZM outperforms 86.96% of its industry peers.
• The Operating Margin of ZM (17.35%) is better than 87.32% of its industry peers.
• In the last couple of years the Operating Margin of ZM has grown nicely.
• ZM has a Gross Margin of 76.33%. This is in the better half of the industry: ZM outperforms 71.74% of its industry peers.

Assessing Health Metrics for NASDAQ:ZM

ChartMill employs a unique Health Rating system for all stocks. This rating, ranging from 0 to 10, is determined by analyzing various liquidity and solvency ratios. For NASDAQ:ZM, the assigned 8 for health provides valuable insights:

• An Altman-Z score of 7.48 indicates that ZM is not in any danger for bankruptcy at the moment.
• Looking at the Altman-Z score, with a value of 7.48, ZM is in the better half of the industry, outperforming 78.62% 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 4.46. This indicates that ZM is financially healthy and has no problem in meeting its short term obligations.
• ZM's Current ratio of 4.46 is amongst the best of the industry. ZM outperforms 84.78% of its industry peers.
• A Quick Ratio of 4.46 indicates that ZM has no problem at all paying its short term obligations.
• The Quick ratio of ZM (4.46) is better than 84.78% of its industry peers.

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

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. 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.