Zoom Communications (ZM) Suffers a Larger Drop Than the General Market: Key Insights

In the latest close session, Zoom Communications (ZM) was down 1.45% at $100.64. This change lagged the S&P 500's daily loss of 0.17%. Meanwhile, the Dow experienced a rise of 0.49%, and the technology-dominated Nasdaq saw a decrease of 0.83%.

Heading into today, shares of the video-conferencing company had gained 19.19% over the past month, outpacing the Computer and Technology sector's gain of 3.01% and the S&P 500's gain of 3.52%.

The upcoming earnings release of Zoom Communications will be of great interest to investors. The company's earnings report is expected on August 25, 2026. The company is predicted to post an EPS of $1.5, indicating a 1.96% decline compared to the equivalent quarter last year. Our most recent consensus estimate is calling for quarterly revenue of $1.27 billion, up 4.22% from the year-ago period.

For the full year, the Zacks Consensus Estimates project earnings of $6.17 per share and a revenue of $5.09 billion, demonstrating changes of +4.22% and +5.91%, respectively, from the preceding year.

Investors should also take note of any recent adjustments to analyst estimates for Zoom Communications. These revisions typically reflect the latest short-term business trends, which can change frequently. Therefore, positive revisions in estimates convey analysts' confidence in the business performance and profit potential.

Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. To capitalize on this, we've crafted the Zacks Rank, a unique model that incorporates these estimate changes and offers a practical rating system.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 2.01% higher. As of now, Zoom Communications holds a Zacks Rank of #3 (Hold).

Investors should also note Zoom Communications's current valuation metrics, including its Forward P/E ratio of 16.56. This represents a discount compared to its industry average Forward P/E of 21.72.

Also, we should mention that ZM has a PEG ratio of 3.73. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. The Internet - Software industry had an average PEG ratio of 1.2 as trading concluded yesterday.

The Internet - Software industry is part of the Computer and Technology sector. With its current Zacks Industry Rank of 108, this industry ranks in the top 44% of all industries, numbering over 250.

The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow ZM in the coming trading sessions, be sure to utilize Zacks.com.

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This article originally published on Zacks Investment Research (zacks.com).

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