It’s time to talk about a popular digital name. Here is the breakdown on $ZM, otherwise known as Zoom Video Communications.
Current Price: $341.57
52/Wk High: $588.84
52/Wk Low: $100.88
Market Cap: $106.8 Billion
Read below for the breakdown!
Zoom Video ($ZM) is a major digital communications platform in which allows users to connect through live voice and video connection.
Given the pandemic, Zoom Video has been in high demand, and the company’s products are used in a vast array of business and educational environments.
Taking a look at the stock itself, Zoom has been quite volatile of late, while the stock is down 17% in the past three months, Zoom has rallied 190.77% in just the past 1 year, leaving investors to wonder if $ZM is a buy.
Digging into the numbers, Zoom beat Q4 estimates with an EPS of $1.22, much better than the analyst’s consensus EPS estimate of $0.79. On a year over year basis, EPS improved by 713.33%.
Revenues surged as well, increasing by a strong 369% on a year over year basis to $882.5 million. Given Q4’s strong results, Zoom finished the year with $2.6514 billion in revenues, representing a 326% increase over FY 2020.
Shifting into income, Zoom Video reported a strong Q4 GAAP income from operations level of $256.1 million, representing a strong 2327% jump in operating income. As for FY 2021, GAAP operating income totaled $659.8 million, representing a solid increase in operating income of 5097%.
When it comes to margins, Zoom reported a Q4 2021 operating margin of 29% on a GAAP basis and 40.9% on a non-GAAP basis.
Net income improved significantly as well with Q4 GAAP net income totaling $260.4 million, much better than the Q4 2020 net income level of $15.3 million.
Shifting into cash flows, Zoom reported cash provided by operating activities of $399.4 million, much better than the $36.6 million from Q4 2020, along with a free cash flow of $377.9 million.
Management was upbeat about the quarter.
“The fourth quarter marked a strong finish to an unprecedented year for Zoom.” CEO Eric Yuan said.
Zoom provided solid guidance as well and expects Q1 2022 revenues to land within a range of $900 million to $905 million.
As for income from operations, management expects it to land within a range of $295 million to $300 million on a non-GAAP basis.
Shifting into the balance sheet, the numbers are solid.
Total Debt: None
Total Liabilities: $1.550 Billion
Total Assets: $3.050 Billion
Cash & Short Term Inv: $1.872 Billion
On a valuation basis, Zoom Video does trade at a premium.
Price to Earnings: 237.86x
Forward Price to Earnings: 115.47x
Price to Sales: 49.60x
Price to Book: 64.81x
Price to Cash Flow: 131.19x
Management has been quite effective as well.
Return on Equity: 37.44%
Return on Assets: 20.15%
Return on Invested Capital: 34.07%
Given the numbers, the analysts are bullish with a mean price target of $489.47/share, representing a strong 43.30% gain.
It is also important to note that the high price target is $610.00/share, representing a 78.59% gain, while the low price target is $375.00/share, representing a 9.79% upside.
The big money is quite involved as well with 53.73% of Zoom Video being owned by institutions. Top holders include The Vanguard Group, Morgan Stanley Investment Management, and BlackRock Institutional Trust.
As for the technicals Zoom has been volatile. According to the six-month charts, the MACD recently crossed back to the downside within a range of 1.24 down to -6.1465.
The six-month charts are also indicating an RSI of 37.04 and CCI of -146.6852, both of which are on the low end.
In short, Zoom Video Communications is a solid company with plenty of industry to grow into, consistently growing revenues and a solid management team.
EAT - SLEEP - PROFIT
Disclaimer: This is not direct financial advice, simply an opinion based on independent research.