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Zoom Communications (ZM) Stock Analysis

This is a peer-relative look at Zoom Communications (ZM): its performance, risk, profitability, growth, financial strength, dividend, and valuation are each measured against its Software & Services peers, so every number reads in context rather than in isolation.

Company Profile

Company profile fields for Zoom Communications (ZM)
Profile ItemZM
NameZoom Communications, Inc. Class A Common Stock
Country/RegionUnited States
GICS SectorInformation Technology
GICS Industry GroupSoftware & Services
GICS IndustrySoftware
GICS Sub-IndustryApplication Software
Market Capitalization26.23 billion USD
CurrencyUSD
ExchangeNasdaq
Listing DateApril 18, 2019
Security TypeCommon Stock

Price Performance

Cumulative Growth

ZM
GSPC
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Zoom Communications (ZM) vs. S&P 500 (GSPC): Growth of a $10,000 investment over the past five years. Adjusted for dividends and splits.

Trailing Returns

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Trailing total returns for Zoom Communications (ZM) and S&P 500 (GSPC). Returns over one year are annualized.

Calendar-Year Returns

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Calendar-year total returns for Zoom Communications (ZM) and S&P 500 (GSPC). Each bar is that year's total return, measured year-end to year-end.

Performance Metrics

Zoom Communications (ZM) metric values compared with Software & Services industry-group medians
MetricCurrent stock: ZMIndustry group median
Total Return (1Y)12.58%-3.00%
Total Return (3Y, Annualized)14.89%8.28%
Total Return (5Y, Annualized)-18.67%-7.91%

Risk Profile

Drawdown History

ZM
GSPC
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Zoom Communications (ZM) vs. S&P 500 (GSPC): Drawdown from the running peak over the past five years. Each line shows the decline from its prior peak; 0% marks a new high.

Return Distribution

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Distribution of monthly total returns for Zoom Communications (ZM) and S&P 500 (GSPC). Each bar is the share of months whose return fell in that 5% bucket.

Risk Metrics

Zoom Communications (ZM) metric values compared with Software & Services industry-group medians
MetricCurrent stock: ZMIndustry group median
Volatility (1Y, Annualized)45.03%61.69%
Beta (5Y)0.991.06
Max Drawdown (5Y)-79.08%-76.52%

Risk-Adjusted Performance

Risk-Return Positioning

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Each dot is a stock plotted by 1-year volatility (risk) and 1-year return. ZM is highlighted; the dashed line is the Capital Allocation Line from the risk-free rate through the industry median — dots above it are stronger on a risk-adjusted basis.

Risk-Adjusted Metrics

Zoom Communications (ZM) metric values compared with Software & Services industry-group medians
MetricCurrent stock: ZMIndustry group median
Sharpe Ratio (1Y)0.18-0.13
Sortino Ratio (1Y)0.28-0.19

Profitability

ROE (TTM)

Zoom Communications (ZM) posts ROE of 32.14%, in the upper peer quartile. That suggests the company earns more from each dollar of shareholders’ equity than most industry peers, a useful capital-efficiency signal.

ZM

Software & Services industry group

32.14%

Group distribution
Max
53.85%
ZM
32.14%
Q3
17.90%
Median
6.59%
Q1
-9.59%
Min
-50.52%
Largest peers
ORCL
41.19%
PLTR
40.91%
IBM
34.77%
MSFT
34.22%
ZM
32.14%
SAP
18.18%
PANW
1.74%
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Where Zoom Communications (ZM) stands on ROE within its Software & Services peer group — the box is the group’s distribution and the dots its largest members.

Net Margin (TTM)

Zoom Communications (ZM) keeps 65.19% of revenue as net profit on net margin, above the industry benchmark range. That is unusually strong bottom-line conversion, though tax effects, asset sales, or other one-off gains should be checked before treating it as durable.

ZM

Software & Services industry group

65.19%

Group distribution
ZM
65.19%
Max
41.17%
Q3
15.28%
Median
4.63%
Q1
-5.42%
Min
-33.17%
Largest peers
ZM
65.19%
PLTR
50.34%
MSFT
41.17%
ORCL
26.36%
SAP
20.41%
IBM
15.99%
PANW
2.67%
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Where Zoom Communications (ZM) stands on net margin within its Software & Services peer group — the box is the group’s distribution and the dots its largest members.

Operating Margin (TTM)

Zoom Communications (ZM) turns 24.61% of revenue into operating profit, putting operating margin in the upper peer quartile. Before financing and taxes enter the picture, the day-to-day business keeps more of each sales dollar than most industry peers.

ZM

Software & Services industry group

24.61%

Group distribution
Max
46.89%
ZM
24.61%
Q3
17.64%
Median
8.73%
Q1
-2.13%
Min
-30.45%
Largest peers
MSFT
49.76%
PLTR
46.89%
ORCL
35.63%
SAP
29.50%
ZM
24.61%
IBM
16.97%
PANW
5.40%
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Where Zoom Communications (ZM) stands on operating margin within its Software & Services peer group — the box is the group’s distribution and the dots its largest members.

Profitability Metrics

Zoom Communications (ZM) metric values compared with Software & Services industry-group medians
MetricCurrent stock: ZMIndustry group median
ROE (TTM)32.14%6.59%
ROA (TTM)6.11%2.45%
Net Margin (TTM)65.19%4.63%
Operating Margin (TTM)24.61%8.73%
Gross Margin (TTM)77.66%70.07%

Growth

Revenue Growth

Zoom Communications (ZM) grew revenue 4.36%, in the lower peer quartile. The top line is expanding more slowly than at most peers, which can reflect softer demand, lost share, or weaker pricing.

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Zoom Communications (ZM): Revenue Growth across different time periods, set against Software & Services industry-group medians.

EPS Growth

Zoom Communications (ZM) grew earnings per share 92.52%, in the upper peer quartile. Per-share profits are compounding faster than at most industry peers.

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Zoom Communications (ZM): EPS Growth across different time periods, set against Software & Services industry-group medians.

Growth Metrics

Zoom Communications (ZM) metric values compared with Software & Services industry-group medians
MetricCurrent stock: ZMIndustry group median
Revenue Growth (YoY)4.36%14.22%
Revenue Growth (3Y CAGR)3.49%13.52%
EPS Growth (YoY)92.52%7.85%
EPS Growth (3Y CAGR)162.93%18.19%

Financial Strength

Current Ratio (MRQ)

Zoom Communications (ZM) has current ratio of 3.83, above the industry’s typical middle range. Liquidity looks ample versus peers, though an unusually high cushion can also mean idle current assets or inefficient working capital.

ZM

Software & Services industry group

3.83

Group distribution
Max
5.11
ZM
3.83
Q3
2.77
Median
1.67
Q1
1.01
Min
0.03
Largest peers
PLTR
7.10
ZM
3.83
MSFT
1.23
ORCL
1.17
SAP
1.16
PANW
0.87
IBM
0.86
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Where Zoom Communications (ZM) stands on current ratio within its Software & Services peer group — the box is the group’s distribution and the dots its largest members.

Debt / Equity (MRQ)

Zoom Communications (ZM) has debt-to-equity ratio of 0.01, in the lower-leverage quartile for its industry. Borrowing is modest relative to equity compared with most peers, which can leave more flexibility through a cycle.

ZM

Software & Services industry group

0.01

Group distribution
Max
2.52
Q3
1.13
Median
0.40
Q1
0.07
ZM
0.01
Min
0.00
Largest peers
ORCL
2.52
IBM
1.85
MSFT
0.28
SAP
0.23
PANW
0.09
PLTR
0.02
ZM
0.01
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Where Zoom Communications (ZM) stands on debt-to-equity ratio within its Software & Services peer group — the box is the group’s distribution and the dots its largest members.

Financial Strength Metrics

Zoom Communications (ZM) metric values compared with Software & Services industry-group medians
MetricCurrent stock: ZMIndustry group median
Current Ratio (MRQ)3.831.67
Debt / Equity (MRQ)0.010.40
Net Debt / EBITDA-5.390.17

Dividends

Dividend Yield (TTM)

Zoom Communications (ZM) pays no dividend, leaving dividend yield at 0.00% this period. Shareholders may still receive value through reinvestment or buybacks, but there is no dividend income to compare here.

ZM

Software & Services industry group

0.00%

Group distribution
ZM
0.00%
Max
0.00%
Q3
0.00%
Median
0.00%
Q1
0.00%
Min
0.00%
Largest peers
IBM
2.73%
ORCL
1.74%
SAP
1.03%
MSFT
0.69%
ZM
0.00%
PLTR
0.00%
PANW
0.00%
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Where Zoom Communications (ZM) stands on dividend yield within its Software & Services peer group — the box is the group’s distribution and the dots its largest members.

Dividend Payout Ratio (TTM)

Zoom Communications (ZM) paid no earnings out as dividends this period, leaving payout ratio at 0.00%. There is no dividend payout to size against earnings.

ZM

Software & Services industry group

0.00%

Group distribution
ZM
0.00%
Max
0.00%
Q3
0.00%
Median
0.00%
Q1
0.00%
Min
0.00%
Largest peers
IBM
57.51%
SAP
36.45%
ORCL
31.35%
MSFT
19.00%
ZM
0.00%
PLTR
0.00%
PANW
0.00%
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Where Zoom Communications (ZM) stands on payout ratio within its Software & Services peer group — the box is the group’s distribution and the dots its largest members.

Dividend Metrics

Zoom Communications (ZM) metric values compared with Software & Services industry-group medians
MetricCurrent stock: ZMIndustry group median
Dividend Yield (TTM)0.00%0.00%
Dividend Payout Ratio (TTM)0.00%0.00%

Valuation

P/E Ratio (TTM)

Zoom Communications (ZM) trades at P/E ratio of 8.34, in the cheaper earnings-multiple quartile for its industry. Investors are paying less for each dollar of TTM earnings than they usually pay for comparable businesses.

ZM

Software & Services industry group

8.34

Group distribution
Max
112.94
Q3
60.32
Median
32.91
Q1
18.77
ZM
8.34
Min
6.69
Largest peers
PANW
784.60
PLTR
112.94
SAP
29.07
MSFT
27.69
IBM
20.90
ORCL
18.20
ZM
8.34
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Where Zoom Communications (ZM) stands on P/E ratio within its Software & Services peer group — the box is the group’s distribution and the dots its largest members.

P/S Ratio (TTM)

Zoom Communications (ZM) trades at 5.25 on P/S ratio, roughly in the peer group’s normal range. The market is not making a strong cheap-or-rich statement about its revenue base.

ZM

Software & Services industry group

5.25

Group distribution
Max
17.91
Q3
8.78
ZM
5.25
Median
4.25
Q1
2.23
Min
0.02
Largest peers
PLTR
53.02
PANW
22.37
MSFT
11.37
SAP
6.84
ZM
5.25
ORCL
5.04
IBM
3.31
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Where Zoom Communications (ZM) stands on P/S ratio within its Software & Services peer group — the box is the group’s distribution and the dots its largest members.

P/B Ratio (MRQ)

Zoom Communications (ZM) trades at 2.32 on P/B ratio, roughly in line with the industry’s normal price-to-book range. Its balance sheet is not being priced at a clear discount or premium versus peers.

ZM

Software & Services industry group

2.32

Group distribution
Max
16.63
Q3
8.50
Median
4.30
ZM
2.32
Q1
1.92
Min
-3.90
Largest peers
SAP
73.25
PLTR
34.41
PANW
9.30
MSFT
8.38
IBM
6.52
ORCL
5.68
ZM
2.32
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Where Zoom Communications (ZM) stands on P/B ratio within its Software & Services peer group — the box is the group’s distribution and the dots its largest members.

Valuation Metrics

Zoom Communications (ZM) metric values compared with Software & Services industry-group medians
MetricCurrent stock: ZMIndustry group median
P/E Ratio (TTM)8.3432.91
P/S Ratio (TTM)5.254.25
P/B Ratio (MRQ)2.324.30
Free Cash Flow Yield (TTM)7.53%3.98%