Shares of Zoom (ZM) are up 12% so far Thursday morning after the company released its fiscal second-quarter earnings, which came in well above the analyst consensus. The company also shared a very optimistic outlook for the remainder of the year.
Here’s how the quarterly results shook out:
- Adjusted earnings per share: $1.34 compared to $1.22 estimate.
- Revenue: $1.162B compared to $1.15B estimate.
CEO and founder Eric Yuan says the company managed to bring on a few marquee clients – one of which represented its biggest deal in company history.
Yuan said the biggest takeaway from the quarter was that Zoom can still win competitive deals for full scale, customer-facing deployments. He also referenced improvements in higher-end offerings which feature AI integration to improve agent performance.
However, the company’s CFO for the past 7 years announced her retirement in the press release as well. Kelly Steckelberg played a pivotal part in helping the company capitalize on the COVID-19 pandemic when video-sharing demand was at an all-time high. There’s no replacement for Steckelberg yet, but the company has already begun the search.
Looking ahead to the current quarter, the company is forecasting earnings per share in the range of $1.29 to $1.31, well above the consensus of $1.24. Revenue guidance of $1.16B to $1.165B is setting up to fall in line or right above the analyst consensus of $1.16B to $1.165B.
For the full year, Zoom now expects revenue between $4.63B and $4.64B compared to the $4.62B it was originally forecasting. The company’s fiscal year ends in January 2025, so we will patiently await the remaining two quarters.
In the meantime, ZM has gained 18% in the last week now, turning around what had been a concerning trend through 2024 thus far. The stock had shed more than 20% on the year as of last week, but things could be headed back in the right direction now.
In fact, we’ve taken a closer look through the VectorVest stock software and found 3 reasons to consider buying ZM today. Here’s what you need to know about this opportunity…
ZM Has Excellent Upside Potential, Fair Safety, and Very Good Timing
VectorVest helps you eliminate human error, guesswork, and emotion from your investment strategy so you can win more trades with less work and stress. You’re given everything you need to make calculated decisions in 3 simple ratings: relative value (RV), relative safety (RS), and relative timing (RT).
Each sits on a scale of 0.00-2.00 with 1.00 being the average, allowing for quick and easy interpretation. Better yet, you’re given a clear buy, sell, or hold recommendation based on the overall VST rating for any given stock at any given time. Here’s what we found for ZM:
- Excellent Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (based on a 3-year price projection), AAA corporate bond rates, and risk. It’s a far superior indicator than the typical comparison of price to value alone. ZM has an excellent RV rating of 1.44.
- Fair Safety: The RS rating is a risk indicator. It’s computed from an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. The RS rating of 0.87 for ZM is a ways below the average but deemed fair nonetheless.
- Very Good Timing: The RT rating is based on the direction, dynamics, and magnitude of the stock’s price movement. It’s calculated day over day, week over week, quarter over quarter, and year over year. ZM has a very good RT rating of 1.31, reflecting the rally we’ve seen take hold this week.
The overall VST rating of 1.22 is good for ZM and the stock is rated a BUY right now. But before you do anything else, take a quick look at this free stock analysis so you can fully capitalize on this opportunity - transform your trading strategy for the better with VectorVest today!
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VectorVest advocates buying safe, undervalued stocks, rising in price. ZM delivered an impressive Q2 performance alongside upbeat guidance for the current quarter and the remainder of the year. The stock itself has excellent upside potential, fair safety, and very good timing.
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