November 23, 2023
Top 10 Stock Zoom Video Communications Sell Recommendation

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For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).

360° View: Obermatt 360° View Zoom Video Communications Sell

360 METRICS	November 23, 2023
VALUE
VALUE	17
GROWTH
GROWTH	21
SAFETY
SAFETY	79
SENTIMENT
SENTIMENT	67
360° VIEW
360° VIEW	24

ANALYSIS: With an Obermatt 360° View of 24 (better than 24% compared with alternatives), overall professional sentiment and financial characteristics for the stock Zoom Video Communications are critical, mostly below average. The 360° View is based on consolidating four consolidated indicators, with half below and half above average for Zoom Video Communications. The consolidated Sentiment Rank has a good rank of 67, which means that professional investors are more optimistic about the stock than for 67% of alternative investment opportunities. It also rates well regarding its financing structure, with the consolidated Safety Rank at 79 or better than 79% of its peers when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the stock is expensive and expects low growth. The consolidated Value Rank is only 17, meaning that the share price of Zoom Video Communications is on the high side, compared with indicators such as revenues, profits, and invested capital. The company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth,and stock returns, with its Growth Rank at 21. ...read more

RECOMMENDATION: With a consolidated 360° View of 24, Zoom Video Communications is worse than 76% of all alternative stock investment opportunities based on the Obermatt Method. This means that Zoom Video Communications shares are on the riskier side for investors. As only half of the consolidated Obermatt Ranks exhibit excellent performance, namely the positive professional market sentiment (Sentiment Rank of 67) and safe financing practices (Safety Rank of 79), the case for investing in this stock needs further thought. The Value and the Safety Ranks are below average. The Safety Rank is the least critical of the four consolidated ranks, because it only reflects financing practices. So the question is: How to assess below-average value against above-average sentiment? This may be a case where growth is in the future, not yet reflected in current performance. Companies that might fall into this category are those with intellectual property, such as technology and pharmaceutical companies. In early phases, they are expensive relative to their size and have a lot of capital on their books, as is the case here. Investors expect a better future and are willing to pay a higher price than is warranted by the current company size. These higher prices drive stock price value down in the short term. In this case, future growth may be the strongest driver of the investment case, reflected by institutional investors' opinions. With a weak Value Rank, the question is how much to sacrifice value at the cost of positive sentiment. Sometimes market sentiment is just hype, but sometimes it is right. You pay more than market-average for this stock, but it may be worth it, if the future of Zoom Video Communicationṣ is bright. Prudent investors may only want to invest a smaller portion of their wealth in such situations. Young investors can carry more risk but should still thrive for sufficient diversification. ...read more

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Sentiment Strategy: Professional Market Sentiment for Zoom Video Communications positive

SENTIMENT METRICS	November 23, 2023
ANALYST OPINION
ANALYST OPINION	12
OPINIONS CHANGE
OPINIONS CHANGE	69
PRO HOLDINGS
PRO HOLDINGS	72
MARKET PULSE
MARKET PULSE	93
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	67

ANALYSIS: With an Obermatt Sentiment Rank of 67 (better than 67% compared with alternatives), overall professional sentiment and engagement for the stock Zoom Video Communications is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for Zoom Video Communications. Analyst Opinions are at a rank of 12 (worse than 88% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 69, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in Zoom Video Communications. Even better, the Professional Investors rank is 72, meaning that professional investors hold more stock in this company than in 72% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 93, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 93% of competitors). ...read more

RECOMMENDATION: With a consolidated Sentiment Rank of 67 (more positive than 67% compared with investment alternatives), Zoom Video Communications has a reputation among professional investors that is above-average compared with that of its competitors. While analysts are still critical of the company, some are changing their minds. In addition, the professional news channels are optimistic, and many institutional investors have already bought stock in the company. These are encouraging signals, despite the still lower level of analyst recommendations. They may be due to a problematic past, and about to change. The positive sentiment signals are stronger than the negative. ...read more

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Value Strategy: Zoom Video Communications Stock Price Value low

VALUE METRICS	November 23, 2023
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	21
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	67
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	40
DIVIDEND YIELD
DIVIDEND YIELD	1
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	17

ANALYSIS: With an Obermatt Value Rank of 17 (worse than 83% compared with alternatives), Zoom Video Communications shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for Zoom Video Communications. Only Price-to-Profit (also referred to as price-earnings, P/E) indicates good stock value with a rank of 67, which means that the stock price compared with what market professionals expect for future profits is lower than for 67% of comparable companies, indicating a good value concerning Zoom Video Communications's profit levels. But Price-to-Sales is 21 which means that the stock price compared with what market professionals expect for future profits is higher than for 79% of comparable companies, indicating a low value concerning Zoom Video Communications's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 40 and for dividend yield, which is lower than for 99% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 17, is a sell recommendation based on Zoom Video Communications's stock price compared with the company's operational size and dividend yields. Can we rely on only one good value indicator? Only if we know the company well. In this case, a high Price-to-Profit Rank, while Price-to-Sales and Price-to-Book are both below the market typical levels, means that the company can charge higher prices for its products and needs less capital to produce them. If this is sustainable, then Zoom Video Communications is a good investment because profits count most in enterprise valuations. The low dividend yield indicates that the company is confident it can do something with the generated cash that is more valuable than paying the profits out to the shareholders in the form of dividends. ...read more

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Growth Strategy: Zoom Video Communications Growth Momentum negative

GROWTH METRICS	November 23, 2023
REVENUE GROWTH
REVENUE GROWTH	24
PROFIT GROWTH
PROFIT GROWTH	31
CAPITAL GROWTH
CAPITAL GROWTH	37
STOCK RETURNS
STOCK RETURNS	39
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	21

ANALYSIS: With an Obermatt Growth Rank of 21 (better than 21% compared with alternatives), Zoom Video Communications shows one of the most restricted growth dynamics in its industry. There is little momentum in this company. The Growth Rank is based on consolidating four value indicators, with all four metrics below average for Zoom Video Communications. Sales Growth has a rank of 24, which means that currently professionals expect the company to grow less than 76% of its competitors. The same is valid for Profit Growth, with a rank of 31, and Capital Growth with 37. In addition, Stock Returns have a below market rank of 39, which means that the stock returns have recently been below 61% of alternative investments. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 21, is a sell recommendation for growth and momentum investors. These are all bad growth momentum indicators. These are negative signals for investors interested in growth companies. Value is likely good for this company, as investors may have left this stock in the cold. If that is the case, investors should look at the company's outlook, especially Sentiment performance, because it may be a turnaround situation that could entail above-average stock returns in the future. But it remains a risky bet, as no growth signals are in the green zone yet. ...read more

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Safety Strategy: Zoom Video Communications Debt Financing Safety very solid

SAFETY METRICS	November 23, 2023
LEVERAGE
LEVERAGE	100
REFINANCING
REFINANCING	83
LIQUIDITY
LIQUIDITY	100
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	79

ANALYSIS: With an Obermatt Safety Rank of 79 (better than 79% compared with alternatives) for 2022, the company Zoom Video Communications has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Zoom Video Communications is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, where all three are above average for Zoom Video Communications. Leverage is at 100, meaning the company has a below-average debt-to-equity ratio. It has less debt than 100% of its competitors. Refinancing is at a rank of 83, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 83% of its competitors. Finally, Liquidity is also good at a rank of 100, which means that the company generates more profit to service its debt than 100% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 79 (better than 79% compared with alternatives), Zoom Video Communications has a financing structure that is significantly safer than that of its competitors. These three positive financing indicators signal that the company is less likely to default on its debt obligations. However, it also means that its shareholder returns will be more modest if things go well. A low safety means fewer troubles in downtimes and less upside in good times. ...read more

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Combined financial peformance: Zoom Video Communications Top Financial Performance

COMBINED PERFORMANCE	November 23, 2023
VALUE
VALUE	17
GROWTH
GROWTH	21
SAFETY
SAFETY	100
COMBINED
COMBINED	88

ANALYSIS: With an Obermatt Combined Rank of 88 (better than 88% compared with investment alternatives), Zoom Video Communications (Application Software, USA) shares have much better financial characteristics than comparable stocks. Shares of Zoom Video Communications are low in value (priced high) with a consolidated Value Rank of 17 (worse than 83% of alternatives) and show below-average growth (Growth Rank of 21) but are safely financed (Safety Rank of 79), which means low debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 88, is a strong buy recommendation based on Zoom Video Communications's financial characteristics. As the company Zoom Video Communications's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 17) and low growth (Obermatt Growth Rank of 21), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 79) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. ...read more

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