Down 80%, Zoom Is A Value Stock: 20x Earnings With 25% Net Cash

Sep. 28, 2022 10:47 PM ETZoom Video Communications, Inc. (ZM)11 Comments

Summary

  • During the pandemic, Zoom soared towards $600 per share but now trades around $75 per share.
  • This used to be a bubble - now it's a value stock.
  • Zoom saw revenues grow more than 5x during the pandemic and has kept those gains - and profits.
  • The stock trades at just 20x earnings with 25% of its market cap held in net cash.
  • Zoom stock looks attractive as part of an allocation in beaten-down tech stocks.
  • Looking for a portfolio of ideas like this one? Members of Best Of Breed Growth Stocks get exclusive access to our model portfolio. Learn More »

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SDI Productions

The Zoom (NASDAQ:ZM) bubble has popped - that much has been made clear after the brutal crash from all-time highs. Yet has the selloff been overdone? I am of that opinion - while the steep deceleration in growth rates since the pandemic

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Data by YCharts

revenue growth

FY23 Q2 Presentation

customer growth

FY23 Q2 Presentation

margins

FY23 Q2 Presentation

cash and cash flow

FY23 Q2 Presentation

outlook

FY23 Q2 Presentation

consensus estimates

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This article was written by

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Julian Lin is a top ranked financial analyst. Julian Lin runs Best Of Breed Growth Stocks, a research service uncovering high conviction ideas in the winners of tomorrow. 

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Disclosure: I/we have a beneficial long position in the shares of ZM, MSFT, FIVN either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am long all positions in the Best of Breed Growth Stocks portfolio.

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