Is Zoom Video Communications Inc (ZM) overvalued?
On Equity Rank's model estimate, ZM trades 21% above its fair value. Zoom Video Communications Inc (ZM) last closed at $89.88; the multi-method model fair value is $74.31.
| Price | Model fair value | Price vs model |
|---|---|---|
| $89.88 | $74.31 | 21% above |
What the answer rests on
- 1 of 8 valuation methods put ZM's value above its price and 7 put it below, so the methods mostly agree.
- To justify today's price, ZM's free cash flow would need to grow about 1.6% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew 17.9% a year.
- Over the past year the price sat below the model fair value on 40% of trading days. The gap ranged from 45% below to 22% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind ZM's fair value · What prices assume · Other companies