Zoom Communications, Inc.'s (NASDAQ:ZM) Low P/E No Reason For Excitement

Simply Wall St.01-03

With a price-to-earnings (or "P/E") ratio of 15.5x Zoom Communications, Inc. (NASDAQ:ZM) may be sending bullish signals at the moment, given that almost half of all companies in the United States have...

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(NASDAQ:ZM) may be sending bullish signals at the moment, given that almost half of all companies in the United States have...</p>\n\n<a href=\"https://simplywall.st/stocks/us/software/nasdaq-zm/zoom-communications/news/zoom-communications-incs-nasdaqzm-low-pe-no-reason-for-excit\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"FT_SY_NQ","symbol_name":"NQ100指数","start_time":0,"source_url":"https://simplywall.st/stocks/us/software/nasdaq-zm/zoom-communications/news/zoom-communications-incs-nasdaqzm-low-pe-no-reason-for-excit","article_id":"2600777011","we_media_id":null,"thumbnails":["https://images.simplywall.st/asset/industry/8041000-choice2-main-header/1585186556238"],"rights":{"source":"simplywall_highlight","url":"https://simplywall.st/stocks/us/software/nasdaq-zm/zoom-communications/news/zoom-communications-incs-nasdaqzm-low-pe-no-reason-for-excit","rn_cache_url":null,"directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2600777011","pubTimestamp":1767449887,"columns":[],"sourceInfo":{"source_id":"simplywall_highlight","name":"Simply Wall St."},"weMediaInfo":null,"summary":"With a price-to-earnings (or \"P/E\") ratio of 15.5x Zoom Communications, Inc. 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(NASDAQ:ZM) may be sending bullish signals at the moment, given that almost half of all companies in the United States have P/E ratios greater than 20x and even P/E's higher than 34x are not unusual.  Although, it's not wise to just take the P/E at face value as there may be an explanation why it's limited.    We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.  Zoom Communications certainly has been doing a good job lately as it's been growing earnings more than most other companies.   It might be that many expect the strong earnings performance to degrade substantially, which has repressed the P/E.  If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.      Check out our latest analysis for Zoom Communications NasdaqGS:ZM Price to Earnings Ratio vs Industry January 3rd 2026 If you'd like to see what analysts are forecasting going forward, you should check out our free report on Zoom Communications.  What Are Growth Metrics Telling Us About The Low P/E?   In order to justify its P/E ratio, Zoom Communications would need to produce sluggish growth that's trailing the market.   If we review the last year of earnings growth, the company posted a terrific increase of 72%.   Pleasingly, EPS has also lifted 130% in aggregate from three years ago, thanks to the last 12 months of growth.  So we can start by confirming that the company has done a great job of growing earnings over that time.     Shifting to the future, estimates from the analysts covering the company suggest earnings growth is heading into negative territory, declining 7.9% per annum over the next three years.  That's not great when the rest of the market is expected to grow by 11% per year.  With this information, we are not surprised that Zoom Communications is trading at a P/E lower than the market.  Nonetheless, there's no guarantee the P/E has reached a floor yet with earnings going in reverse.  Even just maintaining these prices could be difficult to achieve as the weak outlook is weighing down the shares.    The Key Takeaway  While the price-to-earnings ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of earnings expectations.  As we suspected, our examination of Zoom Communications' analyst forecasts revealed that its outlook for shrinking earnings is contributing to its low P/E.  At this stage investors feel the potential for an improvement in earnings isn't great enough to justify a higher P/E ratio.  It's hard to see the share price rising strongly in the near future under these circumstances.     And what about other risks? Every company has them, and we've spotted   2 warning signs for Zoom Communications   (of which 1 is a bit concerning!) you should know about.    Of course, you might find a fantastic investment by looking at a few good candidates. So take a peek at this free list of companies with a strong growth track record, trading on a low P/E.  Mobile Infrastructure for Defense and DisasterThe next wave in robotics isn't humanoid. Its fully autonomous towers delivering 5G, ISR, and radar in under 30 minutes, anywhere.Get the investor briefing before the next round of contractsSponsored On Behalf of CiTechValuation is complex, but we're here to simplify it.Discover if Zoom Communications might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.Access Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. 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