– Is It Finally Time to Buy Zoom Stock? – February 24, –
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Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources , and more. Learn More. Perhaps no company is more emblematic of the pandemic’s impact on the stock market than Zoom Video Communications ZM After going public in April of , Zoom ended that year up only 9.
However, told a different story. Amidst all this stock volatility, Zoom has consistently produced strong business results, and the recent sell-off has made shares much more affordable. With a recent earnings report providing an update on the business, let’s take a look to see if Zoom stock is a buy now.
Zoom’s recent earnings release was for Q3 of the fiscal year , ending April 30, As Zoom laps the quarters where the pandemic had its greatest impact on revenue, growth numbers will appear lower than what investors may be used to.
This deceleration in year-over-year revenue growth was to be expected. What’s going to be important to watch moving forward are the customer metrics that Zoom reports. Zoom is clearly providing products that customers see value in, and they’re responding by spending more each year. Zoom is also a cash generation machine.
This cash balance allows Zoom to make investments in the products that attract new customers and drive the company’s impressive net dollar expansion rate. While Zoom’s Q3 results are impressive, investors should be aware that some of these metrics are slowing from where they were over the past few quarters.
As mentioned above, all of these metrics were bound to slow after Zoom pulled forward so much growth over the past few years. It remains to be seen what growth looks like in the coming quarters and years as the business normalizes.
However, even if the results from this quarter continue to hold steady into the future, that level of business performance would still be impressive. When Zoom was growing revenue in the triple digits during and , the market had the stock priced as if that growth would never slow.
While that was exciting if you were a shareholder, it made buying shares at that time a dicey proposition. On the flip side, the stock is now priced more reasonably, if not undervalued, for what’s likely to be Zoom’s business performance going forward. While that wouldn’t be considered cheap, it is the lowest price-to-earnings multiple that Zoom has had since its IPO.
For investors who believe Zoom’s strong results can continue for years to come , now might be the time to pick up some shares at a discount. Cost basis and return based on previous market day close. Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of Discounted offers are only available to new members. Calculated by Time-Weighted Return since Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns.
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Premium Services. Stock Advisor. View Our Services. Our Purpose:. Latest Stock Picks. Key Points. Today’s Change. Current Price. Recent earnings show a business that continues to put up strong results despite the stock’s performance.
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ZM: Zoom Video Communications – Price & EPS Surprise –
Zoom Video Communications (ZM) Ps Ratio (TTM) –
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