ZOOM COMMUNICATIONS INC (NASDAQ:ZM) was identified by our "Decent Value" stock screener as a company with solid fundamentals and an attractive valuation. The stock scores well on profitability and financial health while trading at a reasonable price relative to its industry peers. Below, we examine why ZM may be worth considering for value-oriented investors.
Valuation
ZM appears undervalued compared to both its industry and the broader market:
- P/E Ratio of 13.27 – Well below the industry average of 69.74 and the S&P 500’s 27.29.
- Forward P/E of 12.72 – Also lower than the sector average, suggesting earnings growth is not fully priced in.
- Enterprise Value/EBITDA – Ranks cheaper than 93.97% of software industry peers.
These metrics indicate that ZM is trading at a discount despite its strong financial position.
Financial Health
The company maintains excellent financial stability:
- No Debt – A rare advantage, eliminating interest expenses and default risk.
- Current Ratio of 4.57 – Indicates strong liquidity, outperforming 86.17% of competitors.
- Altman-Z Score of 8.54 – Far above bankruptcy risk thresholds.
Profitability
ZM generates healthy margins and returns:
- Profit Margin of 22.31% – Among the top 10% in its industry.
- Return on Assets (9.57%) and Equity (11.78%) – Both above average for software firms.
- Operating Margin of 18.13% – Higher than 85.82% of peers.
Growth
While recent growth has slowed, historical performance remains strong:
- 5-Year Revenue Growth (49.60% annually) – Reflects past expansion.
- EPS Growth (73.67% CAGR over 5 years) – Though moderating, still positive.
- Future Revenue & EPS Growth (3%+ projected) – Indicates stability rather than decline.
Our Decent Value screener lists more stocks with similar profiles. For a deeper look, review the full fundamental report on ZM.
Disclaimer
This is not investment advice. Always conduct your own research before making investment decisions.
