Why I’m Looking Forward to ZM’s Earnings on Tuesday

The first-quarter earnings season is almost done, but it certainly is going out with a bang! Take NVIDIA Corporation (NVDA), for example. The company reported its first-quarter results for fiscal year 2022 on Wednesday, and they did not disappoint.

First-quarter revenue soared 84% year-over-year to $5.66 billion, which topped analysts’ estimates for total first-quarter revenue of $5.41 billion. First-quarter earnings surged 103% year-over-year to $3.66 per share, up from $1.80 per share in the same quarter a year ago. The analyst community was anticipating first-quarter earnings of $3.28 per share, so NVIDIA posted an 11.6% earnings surprise.

While the stock pulled back on Thursday, it bounced back nicely today and hit a new 52-week high this afternoon.

We have a few stragglers that will be reporting over the next two weeks, but the next fundamentally superior company I’m most interested in is Zoom Video Communications, Inc. (ZM), which is up to bat with its first-quarter results next Tuesday, June 1. Analysts are expecting earnings of $0.99 per share on $906.3 million in revenue. This represents 395% year-over-year earnings growth, up from adjusted earnings of $0.20 per share in the first quarter of fiscal year 2020, and 176.2% year-over-year revenue growth.

Zoom has continually exceeded analyst expectations. For example, ZM’s fourth-quarter earnings report, released in early March, saw revenue soar 368.8% year-over-year to $882.5 million, up from $188.25 million in the same quarter a year ago. Adjusted earnings per share surged 713.3% year-over-year to $1.22 per share, compared to $0.15 per share in the fourth quarter of 2020. The consensus estimate called for adjusted earnings of $0.79 per share on $811.77 million in revenue, so Zoom posted a whopping 54.4% earnings surprise and an 8.7% revenue surprise.

Company management commented, “The fourth quarter marked a strong finish to an unprecedented year for Zoom.” Zoom saw a 470% jump in customers with more than 10 employees during the quarter, bringing its total to 467,100 customers. That also exceeded expectations for 442,600 customers.

So, is ZM a good buy ahead of its earnings results next week? Well, according to Portfolio Grader, that’s a resounding yes!

ZM holds an A-rating in Portfolio Grader, making in a “Strong Buy.” It also receives an A-rating for its Quantitative Grade and a B-rating for its Fundamental Grade.

ZM’s Quantitative Grade is important here, and I’ll explain exactly why the Quantitative Grade is so heavily weighted in today’s Growth Investor Monthly Issue for June. (Click here to sign up now so you can read the issue while it’s still hot off the presses.)

Once you sign up, you’ll also have access to my three newest High-Growth Investment recommendations, all of which earn an A-rating for their Quantitative Grade and A-rating for their Total Grade.  Plus, I unveil my latest Top 5 Stock list and two brand-new Elite Dividend Payers stocks. If you’re interested, I encourage you to join me at Growth Investor today.

For full details, click here.

Note: Our InvestorPlace offices and the customer-service phone lines are closed on Monday, May 31, along with the stock exchanges, for the Memorial Day holiday. I’ll be back in touch on Tuesday, June 1, with more Market360 articles. I hope you enjoy the long weekend!

Note: The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owned the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:

NVIDIA Corporation (NVDA), Zoom Video Communications (ZM)

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