Zoom Communications (NASDAQ:ZM) stock falls 3.5% in past week as three-year earnings and shareholder returns continue downward trend

While not a mind-blowing move, it is good to see that the Zoom Communications Inc. (NASDAQ:ZM) share price has gained 16% in the last three months. But that doesn't change the fact that the returns over the last three years have been disappointing. In that time, the share price dropped 50%. So the improvement may be a real relief to some. While many would remain nervous, there could be further gains if the business can put its best foot forward.

With the stock having lost 3.5% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.

Check out our latest analysis for Zoom Communications

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the three years that the share price fell, Zoom Communications' earnings per share (EPS) dropped by 7.6% each year. The share price decline of 21% is actually steeper than the EPS slippage. So it seems the market was too confident about the business, in the past.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

We know that Zoom Communications has improved its bottom line lately, but is it going to grow revenue? If you're interested, you could check this free report showing consensus revenue forecasts.

A Different Perspective

Zoom Communications shareholders are up 13% for the year. But that return falls short of the market. The silver lining is that the gain was actually better than the average annual return of 1.0% per year over five year. It is possible that returns will improve along with the business fundamentals. Before spending more time on Zoom Communications it might be wise to click here to see if insiders have been buying or selling shares.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: many of them are unnoticed AND have attractive valuation).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.