Zoom Video Communications Has $6.5 Billion in Cash but Trades at 13 Times Earnings: Is the Stock a Bargain or a Value Trap?
Zoom Video Communications (NASDAQ: ZM) has a lot of the attributes investors look for in a great stock pick. The company's video tools gained a huge number of users during the pandemic, and the business became massive. With just over $4.5 billion in revenue expected for fiscal 2024 (ended Jan. 31), it's on track to deliver nearly $5 in adjusted earnings per share for the year.
But something doesn't quite smell right here. Wall Street isn't giving the stock much love as shares trade at a bargain valuation despite sitting on a massive cash pile, equivalent to about a third of its market cap.
So is Zoom stock a bargain that Wall Street doesn't yet appreciate, or are there good reasons why investors are discounting it? There are arguments to be made on both sides.
Source Fool.com
