Is Zoom Video Communications, Inc. overvalued or undervalued?

As of 21 May 2025, the valuation grade for Zoom Video Communications, Inc. has moved from fair to attractive, indicating a positive shift in its perceived value. The company is currently considered undervalued, with a P/E ratio of 23, an EV to EBIT of 19.40, and a ROCE of 76.26%. In comparison, its peer, which has a P/E of approximately 22.48 and an EV to EBITDA of 14.97, suggests that Zoom is positioned favorably within its industry.
Despite recent underperformance against the S&P 500, with a year-to-date return of -5.32% compared to the index's 2.44%, the strong ROCE and attractive valuation metrics suggest that Zoom Video Communications, Inc. may offer significant upside potential for investors.