In the midst of uncertainty, opportunity often knocks. Zoom Video Communications, a key player in the Software - Application industry, is capturing attention as it navigates the choppy waters of market volatility. With a solid footing in the technology sector and a substantial cash reserve of $7 billion, Zoom is positioned to leverage its financial strength to weather economic fluctuations. Despite reporting a loss in its recent financial statements, the company's robust total stockholder equity of $8 billion highlights its potential to rebound and capitalize on future growth opportunities. As investors search for stability and growth, Zoom's strategic positioning could present a compelling case for consideration. Zoom Video Communications is set to release its earnings report tomorrow. Currently, the company's price-to-book (P/B) ratio is quite stable compared to last year. By November 24, 2024, the Free Cash Flow Per Share is expected to increase to 5.14, while the Enterprise Value might decrease by approximately $19.6 billion. Although some millennials may not be particularly interested in the software sector, Zoom Video Communications presents itself as a distinct investment opportunity worth considering.
Zoom Video financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Zoom Video, including all of Zoom Video's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Zoom Video assets, the company is considered highly leveraged. Understanding the
composition and structure of overall Zoom Video debt and outstanding corporate bonds gives a good idea of
how risky the capital structure of a business is and if it is worth investing in it. Please read more on our
technical analysis page.
Understanding Zoom Total Liabilities
Zoom Video Communications liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Zoom Video Communications has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on Zoom Video balance sheet include debt obligations and money owed to different Zoom Video vendors, workers, and loan providers. Below is the chart of Zoom short long-term liabilities accounts currently reported on its balance sheet.
You can use Zoom Video Communications
financial leverage analysis tool to get a better grip on understanding its financial position
How important is Zoom Video's Liquidity
Zoom Video
financial leverage refers to using borrowed capital as a funding source to finance Zoom Video Communications ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Zoom Video financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Zoom Video's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Zoom Video's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the
breakdown between Zoom Video's total debt and its cash.
Breaking it down
This firm generated the yearly revenue of 4.53
B. Reported Net Income was 637.46
M with gross profit of 3.29
B.
Asset Breakdown
2.1 B
Non Current Assets Total
8.3 B
Total Current Assets
| Total Assets | 10.43 Billion |
| Net Tangible Assets | 7.35 Billion |
| Other Assets | 1.11 Billion |
| Other Current Assets | 449.04 Million |
| Total Current Assets | 8.32 Billion |
| Non Current Assets Total | 2.1 Billion |
| Non Currrent Assets Other | 161.9 Million |
| Intangible Assets | 36.48 Million |
Warren Buffett once said, "Be fearful when others are greedy and greedy when others are fearful." In the current climate of market volatility, Zoom Video Communications (NASDAQ: ZM) stands out as a compelling opportunity.
Despite its negative beta of -0.06, which suggests it moves inversely to the market, Zoom maintains a robust financial position with a market capitalization of $26.43 billion and a total stockholder equity of $8 billion. The company's ability to generate $1.6 billion in cash from operating activities highlights its operational efficiency and financial health. With a price-to-earnings ratio of 32.52X, Zoom offers a balanced mix of growth potential and value, appealing to investors looking for stability amidst uncertainty..
Our take on today Zoom Video roll up
Zoom Video Communications' stock has shown notable price stability, with a recent mean deviation of 1.37. This indicates relatively consistent price movements and reduced volatility, which might appeal to investors looking for more predictable returns. However, it's crucial to monitor market trends and company news, as any significant developments could alter this stability and affect the stock's direction.
The stock's low volatility is further highlighted by a skewness of 0.29 and kurtosis of 0.88. Understanding these volatility metrics can help investors time their market moves effectively. During bear markets, increased volatility can impact Zoom's stock price, potentially causing stress for investors as values drop.
This often leads to portfolio adjustments, with investors seeking alternative financial instruments as prices decline.Zoom Video Communications has certainly captured the spotlight with its recent volatility, leaving investors to ponder its future trajectory. With an analyst consensus leaning towards a "Buy" and a notable number of strong buy recommendations at 9, there's a clear indication of confidence in the stock's potential. However, it's crucial to weigh this optimism against the backdrop of a possible downside price of
79.33 and a highest estimated target price of
85.59. These figures suggest a relatively narrow margin for error, emphasizing the importance of a cautious approach. As Zoom navigates its post-pandemic reality, investors should remain vigilant, balancing the allure of potential gains with the inherent risks of a rapidly evolving market landscape..
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Nico Santiago is a PR Contributor to Macroaxis Editorial Board. Nico is a relatively new author here at Macroaxis and he likes to work on advertising and sponsored content and marketing for the company. Nico spends most of his time surfing when the weather is nice and he spends the rest of the year writing for various blogs and companies, as he works on his upcoming books, The Rise of the Financial Machines and Time Series Modelling with AI.
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