Research

ZM – Market expectations are for Uniform ROA to reach all-time highs, but management may have concerns about growth, Zoom Phone, and Zoom For Home

November 9, 2020
  • Zoom Video Communications, Inc. (ZM:USA) currently trades at a historical high relative to UAFRS-based (Uniform) earnings, with a 210.7x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may have concerns about organic and revenue growth, Zoom Phone’s capabilities, and Zoom For Home
  • Specifically, management may lack confidence in their ability to improve organic growth, maintain revenue growth, and focus on R&D. Moreover, they may lack confidence in their ability to deploy Zoom Phone as a unified communications platform and bring Zoom Phone internationally. Furthermore, they may be concerned about the high percentage of customers that still use legacy PBX systems. In addition, they may lack confidence in their ability to support remote work through Zoom for Home and improve its online video conferencing service. Finally, they may be exaggerating their business position and they may lack confidence in their ability to use promotions to reach out to customers