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 284 industry peers in the Software industry. ZM gets an excellent profitability rating and is at the same time showing great financial health properties. ZM is not valued too expensively and it also shows a decent growth rate. These ratings could make ZM a good candidate for quality investing.
1. Profitability
1.1 Basic Checks
ZM had positive earnings in the past year.
In the past year ZM had a positive cash flow from operations.
ZM had positive earnings in each of the past 5 years.
Each year in the past 5 years ZM had a positive operating cash flow.
1.2 Ratios
ZM's Return On Assets of 9.57% is amongst the best of the industry. ZM outperforms 86.97% of its industry peers.
ZM has a better Return On Equity (11.78%) than 79.58% of its industry peers.
With a decent Return On Invested Capital value of 7.22%, ZM is doing good in the industry, outperforming 79.93% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for ZM is significantly below the industry average of 12.30%.
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's Profit Margin of 22.31% is amongst the best of the industry. ZM outperforms 90.85% of its industry peers.
In the last couple of years the Profit Margin of ZM has grown nicely.
ZM has a Operating Margin of 18.13%. This is amongst the best in the industry. ZM outperforms 85.92% of its industry peers.
ZM's Operating Margin has improved in the last couple of years.
With a decent Gross Margin value of 75.85%, ZM is doing good in the industry, outperforming 69.72% of the companies in the same industry.
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
ZM has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
ZM has less shares outstanding than it did 1 year ago.
Compared to 5 years ago, ZM has more shares outstanding
ZM has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.
2.2 Solvency
ZM has an Altman-Z score of 8.80. This indicates that ZM is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 8.80, ZM belongs to the best of the industry, outperforming 82.75% 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.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0 | ||
| Altman-Z | 8.8 |
ROIC/WACC0.8
WACC9.05%
2.3 Liquidity
A Current Ratio of 4.57 indicates that ZM has no problem at all paying its short term obligations.
With an excellent Current ratio value of 4.57, ZM belongs to the best of the industry, outperforming 85.56% of the companies in the same industry.
A Quick Ratio of 4.57 indicates that ZM has no problem at all paying its short term obligations.
ZM's Quick ratio of 4.57 is amongst the best of the industry. ZM outperforms 85.56% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 4.57 | ||
| Quick Ratio | 4.57 |
3. Growth
3.1 Past
ZM shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 3.89%.
The Earnings Per Share has been growing by 73.67% on average over the past years. This is a very strong growth
The Revenue has been growing slightly by 2.98% in the past year.
ZM shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 49.60% yearly.
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
The Earnings Per Share is expected to grow by 2.56% on average over the next years.
Based on estimates for the next years, ZM will show a small growth in Revenue. The Revenue will grow by 3.08% on average per year.
EPS Next Y0.8%
EPS Next 2Y1.36%
EPS Next 3Y3.48%
EPS Next 5Y2.56%
Revenue Next Year3.15%
Revenue Next 2Y3.2%
Revenue Next 3Y3.35%
Revenue Next 5Y3.08%
3.3 Evolution
The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 13.66, the valuation of ZM can be described as correct.
ZM's Price/Earnings ratio is rather cheap when compared to the industry. ZM is cheaper than 88.38% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 26.31. ZM is valued slightly cheaper when compared to this.
Based on the Price/Forward Earnings ratio of 13.49, the valuation of ZM can be described as correct.
84.86% of the companies in the same industry are more expensive than ZM, based on the Price/Forward Earnings ratio.
ZM is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 22.13, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.66 | ||
| Fwd PE | 13.49 |
4.2 Price Multiples
ZM's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. ZM is cheaper than 92.25% of the companies in the same industry.
90.85% 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 | 13.62 | ||
| EV/EBITDA | 9.22 |
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)16.97
PEG (5Y)0.19
EPS Next 2Y1.36%
EPS Next 3Y3.48%
5. Dividend
5.1 Amount
No dividends for ZM!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
76.63
-0.78 (-1.01%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners74.24%
Inst Owner Change-0.72%
Ins Owners0.2%
Ins Owner Change2.02%
Market Cap23.18B
Analysts72.2
Price Target92.84 (21.15%)
Short Float %2.7%
Short Ratio2.87
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)1.98%
PT rev (3m)-0.63%
EPS NQ rev (1m)1.8%
EPS NQ rev (3m)1.87%
EPS NY rev (1m)0.04%
EPS NY rev (3m)0.96%
Revenue NQ rev (1m)0.41%
Revenue NQ rev (3m)0.33%
Revenue NY rev (1m)0.41%
Revenue NY rev (3m)-0.04%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.66 | ||
| Fwd PE | 13.49 | ||
| P/S | 4.93 | ||
| P/FCF | 13.62 | ||
| P/OCF | 12.56 | ||
| P/B | 2.6 | ||
| P/tB | 2.71 | ||
| EV/EBITDA | 9.22 |
EPS(TTM)5.61
EY7.32%
EPS(NY)5.68
Fwd EY7.41%
FCF(TTM)5.63
FCFY7.34%
OCF(TTM)6.1
OCFY7.96%
SpS15.53
BVpS29.42
TBVpS28.23
PEG (NY)16.97
PEG (5Y)0.19
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 | 8.8 |
F-Score7
WACC9.05%
ROIC/WACC0.8
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 Y0.8%
EPS Next 2Y1.36%
EPS Next 3Y3.48%
EPS Next 5Y2.56%
Revenue 1Y (TTM)2.98%
Revenue growth 3Y4.4%
Revenue growth 5Y49.6%
Sales Q2Q%2.93%
Revenue Next Year3.15%
Revenue Next 2Y3.2%
Revenue Next 3Y3.35%
Revenue Next 5Y3.08%
EBIT growth 1Y18.58%
EBIT growth 3Y-8.56%
EBIT growth 5Y129.77%
EBIT Next Year10.48%
EBIT Next 3Y5.5%
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%