A strong stock as of late has been Zoom Communications (ZM). Shares have been marching higher, with the stock up 6.3% over the past month. The stock hit a new 52-week high of $91.43 in the previous session. Zoom has gained 9.7% since the start of the year compared to the 25.5% gain for the Zacks Computer and Technology sector and the 7.5% return for the Zacks Internet - Software industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on November 24, 2025, Zoom reported EPS of $1.52 versus consensus estimate of $1.43.
For the current fiscal year, Zoom is expected to post earnings of $5.94 per share on $4.85 in revenues. This represents a 7.22% change in EPS on a 3.92% change in revenues. For the next fiscal year, the company is expected to earn $5.93 per share on $5 in revenues. This represents a year-over-year change of -0.2% and 3.21%, respectively.
Valuation Metrics
Though Zoom has recently hit a 52-week high, what is next for Zoom? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). The individual style scores for Value, Growth, Momentum and the combined VGM Score run from A through F. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Zoom has a Value Score of C. The stock's Growth and Momentum Scores are B and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 15.1X current fiscal year EPS estimates, which is not in-line with the peer industry average of 29.2X. On a trailing cash flow basis, the stock currently trades at 20.8X versus its peer group's average of 23.9X. Additionally, the stock has a PEG ratio of 5.25. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Zoom currently has a Zacks Rank of #2 (Buy) thanks to a solid earnings estimate revision trend.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Zoom meets the list of requirements. Thus, it seems as though Zoom shares could have a bit more room to run in the near term.
How Does ZM Stack Up to the Competition?
Shares of ZM have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is 8x8 Inc (EGHT). EGHT has a Zacks Rank of #2 (Buy) and a Value Score of A, a Growth Score of C, and a Momentum Score of F.
Earnings were strong last quarter. 8x8 Inc beat our consensus estimate by 28.57%, and for the current fiscal year, EGHT is expected to post earnings of $0.32 per share on revenue of $719.11 million.
Shares of 8x8 Inc have gained 12.3% over the past month, and currently trade at a forward P/E of 6.84X and a P/CF of 3.35X.
The Internet - Software industry is in the top 23% of all the industries we have in our universe, so it looks like there are some nice tailwinds for ZM and EGHT, even beyond their own solid fundamental situation.
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Zoom Communications, Inc. (ZM): Free Stock Analysis Report 8x8 Inc (EGHT): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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