The second stage is also known as Terminal Value, this is the business’s cash flow after the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.1%. We discount the terminal cash flows to today’s value at a cost of equity of 8.0%. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer.
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- In May, Zoom announced an investment in AI startup Anthropic to support research roadmaps.
- Zoom is unfairly cheap for a company so profitable and flush with cash.
- Generally, low revenue growth is going to translate to low earnings growth.
- The company said it expects revenue of roughly $4.6 billion vs. estimates of $4.637 billion.
In May, Zoom announced an investment in AI startup Anthropic to support research roadmaps. Anthropic’s AI model will be integrated into Zoom’s Contact Center platform. Microsoft (MSFT) and its Teams communications tools are Zoom’s major rival in the business market. Microsoft ifc markets is upgrading its products with technology from startup OpenAI. Meanwhile, recently told its employees to report to its offices on a more regular basis. Amid Covid-19 emergency, demand for Zoom videoconferencing software surged as businesses told employees to work from home.
Prior to founding Zoom, Yuan was corporate vice president of engineering at Cisco, and was a founding engineer and vice president of engineering for web and videoconferencing platform Webex. As mentioned above, on Sept. 30, 2021, Five9 announced that the two parties had mutually agreed to abandon the deal. The company said that the agreement had not received the required number of votes from Five9 shareholders to approve the merger. Earlier in September, The Wall Street Journal reported that a U.S.
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Zoom Video reported January-quarter earnings and revenue that topped estimates and announced a $1.5 billion buyback of its own shares. However, analysts expect Zoom’s adjusted EPS to dip liteforex review 5% in fiscal 2025 and only rise 1% in fiscal 2026. It might beat those estimates with buybacks throughout the year, but that anemic outlook suggests it’s running out of room to grow.
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Its post-pandemic slowdown dragged on as macro headwinds drove companies to rein in their software spending and aggressive competitors like Microsoft expanded their videoconferencing ecosystems. In fiscal 2024, Zoom’s revenue only increased 3% — but its layoffs and tighter spending boosted its adjusted EPS by 19%. While Zoom Video Communications currently has a «Hold» rating among analysts, top-rated analysts believe these five stocks are better buys. MarketBeat keeps okcoin review track of Wall Street’s top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest and most accurate reporting.
Trading Strategies for Zoom Communication Stock Before And After Q4 Earnings – Zoom Video Comms (NASDAQ:ZM)
Zoom’s growth has moderated dramatically since the Covid pandemic, and the company is projecting a revenue increase of less than 2% for the current fiscal year. According to 21 analysts, the average rating for ZM stock is «Hold.» The 12-month stock price forecast is $77.6, which is an increase of 22.63% from the latest price. Zoom could fall on its face and grow its earnings at half the pace analysts expect, and the stock’s PEG ratio would still be under 1. That’s why analysts estimate Zoom’s earnings growth could average over 30% annually over the next three to five years.
The Motley Fool has positions in and recommends Zoom Video Communications. Fortunately, low expectations don’t require home-run results to create significant investment returns. Zoom is unfairly cheap for a company so profitable and flush with cash.