Zoom Communications, Inc. (ZM) Fair Value & PE Analysis
Software - Application · NASDAQ
Current Price
$94.77
PE Ratio (TTM)
8.6x
Intrinsic Value
$119.29
+20.6% margin of safety
What Is Zoom Communications, Inc.'s Fair Value?
As of 2026-10-07, applying a 8.5x earnings multiple to Zoom Communications, Inc.'s (ZM) earnings per share of $11.1 yields a fair value estimate of $119.29 per share, versus a market price of $94.77.
Fair value from earnings multiples is sensitive to the multiple you choose. Across the sensitivity grid the estimate spans $87.09 to $157. This is a relative estimate anchored to earnings, not a statement of fact. For a cash flow based view, see the intrinsic value estimate on the DCF page.
How the PE model works · Recalculate in PE mode · ZM intrinsic value (DCF view)
Is Zoom Communications, Inc. (ZM) Overvalued?
At $94.77, ZM trades about 20.6% below its PE-based fair value estimate, a modest discount to its earnings power, though not enough to call it cheap outright.
COMPETITIVE MOAT
↑Strong Brand Recognition
Zoom's brand is synonymous with video conferencing, creating high awareness and trust. This recognition simplifies customer acquisition and retention.
↑Network Effects in Usage
The more people use Zoom, the more valuable it becomes for others to join. This creates a self-reinforcing cycle of adoption and engagement.
↑Ecosystem Integration Potential
Zoom's expanding suite of AI-powered tools and integrations aims to deepen user engagement. This creates stickiness by embedding Zoom into workflows.
INVESTMENT RISKS
↓Dependence on Video Conferencing
While expanding, Zoom's core revenue driver remains video conferencing. A significant shift away from this modality could impact growth.
↓AI Integration Execution Risk
Successfully integrating and monetizing AI features requires significant R&D and market adoption. Failure to execute could hinder future growth.
↓Data Privacy and Security Concerns
As a communication platform, Zoom faces ongoing scrutiny regarding data handling and security. Breaches or perceived vulnerabilities can damage trust.
Base case
ZM base case PE valuation
Intrinsic Value
$119.29
Margin of safety
+20.6%
Expected annual return
+4.7%
Base case assumptions: 4.1% annual earnings growth, 8.54x target PE, 10% discount rate, 5 year projection. Data as of 2026-10-07.
This base case uses default assumptions and is not financial advice. The fair value changes significantly when the target PE or earnings growth rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the ZM PE valuation
Adjust the target PE, earnings growth, and discount rate to see how the fair value and margin of safety for Zoom Communications, Inc. respond.
Open PE Calculator for ZMCompany Overview
Zoom Communications, Inc. provides a robust platform for enhancing communication and fostering collaboration. The company's global reach is organized into three primary operational regions: the Americas, the Asia Pacific, and Europe, the Middle East, and Africa (EMEA). Eric S. Yuan founded the enterprise in 2011, and its corporate headquarters are situated in San Jose, California.
Financial Metrics — ZM PE Stock Valuation Data
PE Ratio (TTM)
8.6x
PEG Ratio
0.05
Earnings Yield
11.71%
ROE (TTM)
32.3%
Revenue/Share (TTM)
$17.00
Debt/Equity
0.01x
Frequently Asked Questions
What is the PE ratio of ZM?
The trailing twelve-month PE ratio of ZM reflects how much investors pay per dollar of Zoom Communications, Inc.'s earnings. This metric is most useful when compared to Software - Application peers and the company's own historical range.
Is ZM overvalued based on PE ratio?
ZM's PE of 8.6x combined with a PEG ratio of 0.05 provides a growth-adjusted perspective. A PEG below 1.0 means the P/E is low relative to the earnings growth rate. Keep in mind that PE-based valuation works best for profitable, mature companies — for high-growth or cyclical Software - Application, a DCF analysis may be more appropriate.
How do I value ZM stock using PE ratio?
To value Zoom Communications, Inc. using PE: (1) Compare the current PE (8.6x) against the Software - Application median to assess relative pricing, (2) check the PEG ratio (0.05) to adjust for growth expectations, (3) review the 5-year PE range to identify where the stock sits historically, and (4) estimate fair value by multiplying a target PE by forward EPS estimates. This relative approach complements DCF's absolute valuation.
What is the PEG ratio of ZM?
ZM's PEG ratio is 0.05, calculated by dividing the PE ratio (8.6x) by the expected earnings growth rate. A PEG below 1.0 means the P/E is low relative to the expected earnings growth rate. Note that PEG accuracy depends on the reliability of growth estimates.
Should I use PE ratio or DCF for ZM stock valuation?
PE ratio gives a quick relative read — how ZM is priced versus Software - Application peers. DCF provides an absolute value based on projected free cash flows. For ZM, with a strong ROE of 32.3%, both methods are worth using — PE for a market-relative check, DCF to stress-test whether fundamentals justify the price. Each method has blind spots: PE ignores capital structure and cash flow quality, while DCF is sensitive to growth and discount rate assumptions.
Learn More
- See ZM DCF Valuation → — Intrinsic value via Discounted Cash Flow analysis
- PE Methodology — Step-by-step guide to PE ratio stock valuation
- DCF Methodology — Guide to discounted cash flow analysis
- PE Ratio — Understanding the price-to-earnings ratio
- Intrinsic Value — How to evaluate stock fair value
Related PE Valuations
All Technology valuationsP/E and DCF value ZM with different methods and assumptions, so the two conclusions can differ. Compare the DCF intrinsic value.
Price as of 2026-10-07. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.