Zoom Communications, Inc. (ZM) stock analysis
Close on Nov 12, 2026Market cap $28.51BP/E 9.0Yield –
StockData Score
Prices as of Nov 11, 2026How the score works
Solid21 of 30 checks passed
Zoom Communications passes 21 of the 30 checks behind our score; 5 could not be run for lack of data and count as not passed. Each dot in the shape is one check — hover it for the numbers.
- Valuation
- 6/6
- Growth
- 4/6
- Past performance
- 5/6
- Financial health
- 6/6
- Dividend
- 0/6
What stands out
Margin of safety over 20%
The price is 46.3% below fair value, more than the 20% cushion we look for.
Trading below fair value
The share price of $98.08 is below our fair value estimate of $182.74.
Return on capital over 10%
Return on invested capital was 35.3%, above the 10% that usually covers the cost of capital.
No debt
Zoom Communications has no borrowings on its latest balance sheet.
What to watch
Return on equity under 15%
Return on equity was 32.1% over the last twelve months and averaged 14.3% over five years; we look for 15% on both.
Revenue growing under 10% a year
Revenue grew 3.5% a year over the last three fiscal years, short of the 10% we look for.
Growing slower than the industry
Revenue grew 5.0% over the last twelve months; the Computer Programming, Data Processing, and Other Computer Related Services median is 9.6%.
No dividend
Zoom Communications has not paid a dividend in the last twelve months.
Valuation6/6
P/E below its 5-year median
Zoom Communications's P/E of 9.1 is below its own 5-year median of 25.2.
P/E below the industry
Zoom Communications's P/E of 9.1 is below the Computer Programming, Data Processing, and Other Computer Related Services median of 27.6.
EV/EBITDA below its 5-year median
Zoom Communications's EV/EBITDA of 16.2 is below its 5-year median of 24.3.
P/B below the industry
Zoom Communications's price-to-book of 2.53 is below the Computer Programming, Data Processing, and Other Computer Related Services median of 3.32.
Trading below fair value
The share price of $98.08 is below our fair value estimate of $182.74.
Margin of safety over 20%
The price is 46.3% below fair value, more than the 20% cushion we look for.
Growth4/6
Revenue growing under 10% a year
Revenue grew 3.5% a year over the last three fiscal years, short of the 10% we look for.
EPS growing 10%+ a year
Diluted EPS grew 163% a year over the last three fiscal years.
Earnings growth accelerating
Net income grew 174% over the last twelve months, against a 5-year average of 23.1% a year.
Growing slower than the industry
Revenue grew 5.0% over the last twelve months; the Computer Programming, Data Processing, and Other Computer Related Services median is 9.6%.
Guidance raised
Zoom Communications raised its full fiscal year 2027 revenue in constant currency outlook on Aug 25, 2026.
Gross margin improving
Gross margin was 77.3% over the last twelve months, against 76.4% a year earlier.
Past performance5/6
Return on equity under 15%
Return on equity was 32.1% over the last twelve months and averaged 14.3% over five years; we look for 15% on both.
Return on capital over 10%
Return on invested capital was 35.3%, above the 10% that usually covers the cost of capital.
Return on equity above the industry
Zoom Communications's return on equity of 32.1% is above the Computer Programming, Data Processing, and Other Computer Related Services median of -1.2%.
Earnings grew over 5 years
Net income grew 23.1% a year on average over the last five fiscal years.
Net margin above its 5-year average
Net margin was 65.2% over the last twelve months, against a 5-year average of 22.1%.
Net margin above the industry
Zoom Communications's net margin of 65.2% is above the Computer Programming, Data Processing, and Other Computer Related Services median of -4.8%.
Financial health6/6
No debt
Zoom Communications has no borrowings on its latest balance sheet.
Debt not rising
With no debt today, leverage cannot have risen.
Debt covered by cash flow
There is no debt to cover.
Interest well covered
No meaningful interest expense to cover.
Short-term assets cover short-term debts
Current assets are 3.83 times current liabilities.
Low bankruptcy risk
The Altman Z-score is 9.50; above 3 is the safe zone and below 1.8 the distress zone.
Dividend0/6
No dividend
Zoom Communications has not paid a dividend in the last twelve months.
Yield against Treasuries
No dividend.
Yield against the market
No dividend.
Dividend stability
No dividend.
Earnings cover
No dividend.
Cash-flow cover
No dividend.
Fair value
How we estimate itOur estimate per share
$182.74
The share price is 46% below this estimate.
| Method | Multiple used | Own 5Y median | Industry median | Value per share | Weight |
|---|---|---|---|---|---|
| P/E | 26.4× | 25.2× | 27.6× | $284.92 | 44% |
| EV/EBITDA | 21.6× | 24.3× | 18.8× | $122.22 | 39% |
| Earnings power | 11.6% cost of equity | – | – | $51.45 | 17% |
| Fair value | $182.74 | 100% | |||
Valuation over time
Using the earnings and balance sheet published at each date, not today's.
- P/E at month end
- Own 5-year median 25.2
- Computer Programming, Data Processing, and Other Computer Related Services median 27.6
An estimate from reported numbers and market multiples, not a price target or investment advice. It can be far off for companies whose profits are about to change sharply.
Market risk
From the past year of daily prices.
Liquidity
Low risk
- Average value traded per day
- $251.88M
- Value traded per 1% price move
- $137.43M
Downside
Medium risk
- Typical loss in a bad month
- 20.3%
- Volatility (annualized)
- 46%
- Sharpe ratio, 1 year
- 0.30
- Beta to the S&P 500 (5Y)
- 1.35
Typical bad-month loss, week by week
Margins
Share of revenue, fiscal years 2017 to 2026
Gross margin
Operating margin
Net margin
Growth rates
Compound annual growth to fiscal 2026
| Per year | 1 year | 3 years | 5 years | 10 years | Five-year pace |
|---|---|---|---|---|---|
| Revenue | +4.4% | +3.5% | +12.9% | – | |
| Gross profit | +6.1% | +4.4% | +15.4% | – | |
| Operating income | +38.2% | +66.0% | +11.2% | – | |
| Net income | +88.1% | +163.6% | +23.1% | – | |
| EPS, diluted | +92.5% | +162.9% | +22.4% | – | |
| Free cash flow | +6.4% | +17.5% | +6.7% | – |
Returns and balance sheet
10 fiscal years. Hover a measure to see how it is calculated.
| Measure | FY2017 | FY2021 | FY2026 | Trend |
|---|---|---|---|---|
| Return on equity | – | 28.6% | 20.3% | |
| Return on assets | – | 20.4% | 16.6% | |
| Current ratio | – | 3.80 | 4.33 | |
| Capex to revenue | – | 3.0% | 1.3% | |
| Diluted shares | – | 298M | 307M |
Where the cash went
Fiscal 2022 to 2026, five years combined
Zoom Communications generated $8.43B from operations and spent $4.28B on capital expenditure, dividends and share buybacks. 13% of that went back into the business.
DuPont analysis
Return on equity split into margin, efficiency and leverage
| Fiscal year | Net margin | Asset turnover | Equity multiplier | Return on equity |
|---|---|---|---|---|
| FY2026 | 39.0% | 0.42× | 1.22× | 20.3% |
| FY2025 | 21.7% | 0.45× | 1.23× | 11.9% |
| FY2024 | 14.1% | 0.50× | 1.27× | 9.0% |
| FY2023 | 2.4% | 0.56× | 1.31× | 1.7% |
| FY2022 | 33.6% | 0.64× | 1.33× | 28.5% |
| FY2021 | 25.4% | 0.80× | 1.40× | 28.6% |
| FY2020 | 4.1% | 0.76× | 1.99× | 6.1% |
Piotroski F-Score
Nine tests of profitability, balance sheet and efficiency, fiscal 2026 against fiscal 2025
- ProfitableNet income above zero$1.90B
- Cash generatingOperating cash flow above zero$1.99B
- Return on assets improvedROA up on the prior year10.2% → 17.3%
- Earnings backed by cashOperating cash flow above net income$1.99B vs $1.90B
- Less leverageLong-term debt to assets fell– → –
- Better liquidityCurrent ratio rose4.56 → 4.33
- No dilutionShare count did not rise315M → 307M
- Gross margin improvedGross margin up on the prior year75.79% → 77.02%
- More efficientAsset turnover rose0.47 → 0.44
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