ZOOM COMMUNICATIONS INC (ZM) Stock Fundamental Analysis
NASDAQ:ZM - Nasdaq - US98980L1017 - Common Stock - Currency: USD
We assign a fundamental rating of 7 out of 10 to ZM. ZM was compared to 283 industry peers in the Software industry. ZM scores excellent points on both the profitability and health parts. This is a solid base for a good stock. ZM is valued quite cheap, while showing a decent growth score. This is a good combination! This makes ZM very considerable for value and quality investing!
1. Profitability
1.1 Basic Checks
ZM had positive earnings in the past year.
ZM had a positive operating cash flow in the past year.
In the past 5 years ZM has always been profitable.
In the past 5 years ZM always reported a positive cash flow from operatings.
1.2 Ratios
ZM has a better Return On Assets (9.57%) than 86.57% of its industry peers.
The Return On Equity of ZM (11.78%) is better than 78.45% of its industry peers.
Looking at the Return On Invested Capital, with a value of 7.22%, ZM is in the better half of the industry, outperforming 78.09% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for ZM is significantly below the industry average of 11.87%.
The 3 year average ROIC (5.31%) for ZM is below the current ROIC(7.22%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 9.57% | ||
| ROE | 11.78% | ||
| ROIC | 7.22% |
ROA(3y)5.63%
ROA(5y)9.55%
ROE(3y)6.98%
ROE(5y)12.42%
ROIC(3y)5.31%
ROIC(5y)8.46%
1.3 Margins
ZM has a Profit Margin of 22.31%. This is amongst the best in the industry. ZM outperforms 89.05% of its industry peers.
In the last couple of years the Profit Margin of ZM has grown nicely.
The Operating Margin of ZM (18.13%) is better than 85.16% of its industry peers.
ZM's Operating Margin has improved in the last couple of years.
ZM has a Gross Margin of 75.85%. This is in the better half of the industry: ZM outperforms 69.96% of its industry peers.
ZM's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 18.13% | ||
| PM (TTM) | 22.31% | ||
| GM | 75.85% |
OM growth 3Y-12.41%
OM growth 5Y53.59%
PM growth 3Y-13.57%
PM growth 5Y43.97%
GM growth 3Y0.67%
GM growth 5Y-1.44%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so ZM is destroying value.
Compared to 1 year ago, ZM has less shares outstanding
Compared to 5 years ago, ZM has more shares outstanding
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.
2.2 Solvency
An Altman-Z score of 8.28 indicates that ZM is not in any danger for bankruptcy at the moment.
ZM's Altman-Z score of 8.28 is amongst the best of the industry. ZM outperforms 81.63% 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.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0 | ||
| Altman-Z | 8.28 |
ROIC/WACC0.63
WACC11.46%
2.3 Liquidity
ZM has a Current Ratio of 4.57. This indicates that ZM is financially healthy and has no problem in meeting its short term obligations.
ZM has a better Current ratio (4.57) than 86.93% of its industry peers.
A Quick Ratio of 4.57 indicates that ZM has no problem at all paying its short term obligations.
ZM has a Quick ratio of 4.57. This is amongst the best in the industry. ZM outperforms 86.93% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 4.57 | ||
| Quick Ratio | 4.57 |
3. Growth
3.1 Past
The Earnings Per Share has been growing slightly by 3.89% over the past year.
ZM shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 73.67% yearly.
Looking at the last year, ZM shows a small growth in Revenue. The Revenue has grown by 2.98% in the last year.
Measured over the past years, ZM shows a very strong growth in Revenue. The Revenue has been growing by 49.60% on average per year.
EPS 1Y (TTM)3.89%
EPS 3Y2.87%
EPS 5Y73.67%
EPS Q2Q%5.93%
Revenue 1Y (TTM)2.98%
Revenue growth 3Y4.4%
Revenue growth 5Y49.6%
Sales Q2Q%2.93%
3.2 Future
ZM is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 2.47% yearly.
ZM is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 3.06% yearly.
EPS Next Y4.06%
EPS Next 2Y2.88%
EPS Next 3Y3.45%
EPS Next 5Y2.47%
Revenue Next Year3.15%
Revenue Next 2Y3.22%
Revenue Next 3Y3.33%
Revenue Next 5Y3.06%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
ZM is valuated correctly with a Price/Earnings ratio of 12.44.
Based on the Price/Earnings ratio, ZM is valued cheaply inside the industry as 86.57% of the companies are valued more expensively.
ZM's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 26.51.
The Price/Forward Earnings ratio is 11.92, which indicates a very decent valuation of ZM.
88.69% of the companies in the same industry are more expensive than ZM, based on the Price/Forward Earnings ratio.
When comparing the Price/Forward Earnings ratio of ZM to the average of the S&P500 Index (34.09), we can say ZM is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.44 | ||
| Fwd PE | 11.92 |
4.2 Price Multiples
92.93% of the companies in the same industry are more expensive than ZM, based on the Enterprise Value to EBITDA ratio.
91.87% of the companies in the same industry are more expensive than ZM, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 12.4 | ||
| EV/EBITDA | 7.42 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates ZM does not grow enough to justify the current Price/Earnings ratio.
The excellent profitability rating of ZM may justify a higher PE ratio.
PEG (NY)3.07
PEG (5Y)0.17
EPS Next 2Y2.88%
EPS Next 3Y3.45%
5. Dividend
5.1 Amount
ZM does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
69.77
-1.8 (-2.52%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners74.64%
Inst Owner Change1.02%
Ins Owners0.21%
Ins Owner Change1.76%
Market Cap21.11B
Analysts72.2
Price Target92.48 (32.55%)
Short Float %2.75%
Short Ratio2.34
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
Yearly DividendN/A
Dividend Growth(5Y)N/A
DPN/A
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)5.67%
Min EPS beat(2)5.11%
Max EPS beat(2)6.23%
EPS beat(4)4
Avg EPS beat(4)6.17%
Min EPS beat(4)2.2%
Max EPS beat(4)11.15%
EPS beat(8)8
Avg EPS beat(8)11.5%
EPS beat(12)12
Avg EPS beat(12)15.41%
EPS beat(16)15
Avg EPS beat(16)14.34%
Revenue beat(2)0
Avg Revenue beat(2)-2.36%
Min Revenue beat(2)-2.54%
Max Revenue beat(2)-2.19%
Revenue beat(4)0
Avg Revenue beat(4)-2.08%
Min Revenue beat(4)-2.54%
Max Revenue beat(4)-1.79%
Revenue beat(8)0
Avg Revenue beat(8)-1.73%
Revenue beat(12)0
Avg Revenue beat(12)-1.94%
Revenue beat(16)1
Avg Revenue beat(16)-1.66%
PT rev (1m)0.36%
PT rev (3m)1.6%
EPS NQ rev (1m)0%
EPS NQ rev (3m)1.76%
EPS NY rev (1m)0%
EPS NY rev (3m)3.26%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.41%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.39%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 12.44 | ||
| Fwd PE | 11.92 | ||
| P/S | 4.49 | ||
| P/FCF | 12.4 | ||
| P/OCF | 11.43 | ||
| P/B | 2.37 | ||
| P/tB | 2.47 | ||
| EV/EBITDA | 7.42 |
EPS(TTM)5.61
EY8.04%
EPS(NY)5.85
Fwd EY8.39%
FCF(TTM)5.63
FCFY8.06%
OCF(TTM)6.1
OCFY8.75%
SpS15.53
BVpS29.42
TBVpS28.23
PEG (NY)3.07
PEG (5Y)0.17
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 9.57% | ||
| ROE | 11.78% | ||
| ROCE | 9.41% | ||
| ROIC | 7.22% | ||
| ROICexc | 51.78% | ||
| ROICexgc | 72.67% | ||
| OM | 18.13% | ||
| PM (TTM) | 22.31% | ||
| GM | 75.85% | ||
| FCFM | 36.23% |
ROA(3y)5.63%
ROA(5y)9.55%
ROE(3y)6.98%
ROE(5y)12.42%
ROIC(3y)5.31%
ROIC(5y)8.46%
ROICexc(3y)36.3%
ROICexc(5y)N/A
ROICexgc(3y)50.43%
ROICexgc(5y)N/A
ROCE(3y)6.92%
ROCE(5y)11.03%
ROICexcg growth 3Y-24.37%
ROICexcg growth 5Y47.41%
ROICexc growth 3Y-31.14%
ROICexc growth 5Y37.92%
OM growth 3Y-12.41%
OM growth 5Y53.59%
PM growth 3Y-13.57%
PM growth 5Y43.97%
GM growth 3Y0.67%
GM growth 5Y-1.44%
F-Score7
Asset Turnover0.43
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0 | ||
| Debt/EBITDA | 0 | ||
| Cap/Depr | 109.66% | ||
| Cap/Sales | 3.06% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 187.8% | ||
| Profit Quality | 162.36% | ||
| Current Ratio | 4.57 | ||
| Quick Ratio | 4.57 | ||
| Altman-Z | 8.28 |
F-Score7
WACC11.46%
ROIC/WACC0.63
Cap/Depr(3y)124.25%
Cap/Depr(5y)194.34%
Cap/Sales(3y)2.78%
Cap/Sales(5y)3.03%
Profit Quality(3y)514.4%
Profit Quality(5y)371.14%
High Growth Momentum
Growth
EPS 1Y (TTM)3.89%
EPS 3Y2.87%
EPS 5Y73.67%
EPS Q2Q%5.93%
EPS Next Y4.06%
EPS Next 2Y2.88%
EPS Next 3Y3.45%
EPS Next 5Y2.47%
Revenue 1Y (TTM)2.98%
Revenue growth 3Y4.4%
Revenue growth 5Y49.6%
Sales Q2Q%2.93%
Revenue Next Year3.15%
Revenue Next 2Y3.22%
Revenue Next 3Y3.33%
Revenue Next 5Y3.06%
EBIT growth 1Y18.58%
EBIT growth 3Y-8.56%
EBIT growth 5Y129.77%
EBIT Next Year10.58%
EBIT Next 3Y4.77%
EBIT Next 5Y4.97%
FCF growth 1Y58.52%
FCF growth 3Y7.41%
FCF growth 5Y73.91%
OCF growth 1Y56.13%
OCF growth 3Y6.61%
OCF growth 5Y66.53%