Critical Analysis: Zoom Video Communications (NASDAQ:ZM) & 21Vianet Group (NASDAQ:VNET)

Zoom Video Communications (NASDAQ:ZM) and 21Vianet Group (NASDAQ:VNET) are both computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, earnings, profitability, dividends, risk and institutional ownership.

Profitability

This table compares Zoom Video Communications and 21Vianet Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Zoom Video Communications 17.10% 27.93% 14.44%
21Vianet Group -55.01% -49.02% -15.31%

Earnings and Valuation

This table compares Zoom Video Communications and 21Vianet Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Zoom Video Communications $622.66 million 186.45 $25.31 million $0.09 4,535.22
21Vianet Group $544.25 million 4.32 -$26.18 million ($0.24) -86.71

Zoom Video Communications has higher revenue and earnings than 21Vianet Group. 21Vianet Group is trading at a lower price-to-earnings ratio than Zoom Video Communications, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

38.0% of Zoom Video Communications shares are owned by institutional investors. Comparatively, 44.1% of 21Vianet Group shares are owned by institutional investors. 24.3% of Zoom Video Communications shares are owned by insiders. Comparatively, 12.1% of 21Vianet Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Risk & Volatility

Zoom Video Communications has a beta of -1.24, indicating that its share price is 224% less volatile than the S&P 500. Comparatively, 21Vianet Group has a beta of 0.25, indicating that its share price is 75% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Zoom Video Communications and 21Vianet Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Zoom Video Communications 2 10 15 0 2.48
21Vianet Group 0 0 5 0 3.00

Zoom Video Communications currently has a consensus price target of $358.08, suggesting a potential downside of 12.27%. 21Vianet Group has a consensus price target of $18.90, suggesting a potential downside of 9.18%. Given 21Vianet Group’s stronger consensus rating and higher probable upside, analysts plainly believe 21Vianet Group is more favorable than Zoom Video Communications.

Summary

Zoom Video Communications beats 21Vianet Group on 10 of the 14 factors compared between the two stocks.

About Zoom Video Communications

Zoom Video Communications, Inc. provides a video-first communications platform that changes how people interact primarily in the Americas, the Asia Pacific, Europe, the Middle East, and Africa. It connects people through frictionless video, voice, chat, and content sharing. The company's cloud-native platform enables face-to-face video experiences and connects users across various devices and locations in a single meeting. It serves education, entertainment/media, enterprise infrastructure, finance, healthcare, manufacturing, non-profit/not for profit and social impact, retail/consumer products, and software/Internet industries, as well as individuals. The company was formerly known as Zoom Communications, Inc. and changed its name to Zoom Video Communications, Inc. in May 2012. Zoom Video Communications, Inc. was founded in 2011 and is headquartered in San Jose, California.

About 21Vianet Group

21Vianet Group, Inc. provides carrier and cloud-neutral Internet data center services to Internet companies, government entities, blue-chip enterprises, and small-to mid-sized enterprises in the People's Republic of China. It offers hosting and related services to house servers and networking equipment in its data centers, and connects them through a data transmission network. Its hosting and related services include managed hosting services that offer data center space to house its customers' servers and networking equipment, and provide tailored server administration services; and interconnectivity services that enable customers to connect their servers with Internet backbones and other networks through its border gateway protocol network or single-line, dual-line, or multiple-line network. Its hosting and related services also comprise cloud services that enable businesses to run their applications over the Internet using its IT infrastructure; virtual private network services; Hybrid IT Services, which provide customers with a complete package of infrastructure service offerings; and other value-added services, such as firewall, server load balancing, data backup and recovery, data center management, server management, and backup server services. In addition, the company provides traffic charts and analysis, gateway monitoring for servers, domain name system setup, defense mechanism against distributed denial of service attacks, basic setting of switches and routers, and virus protections; and managed network service. As of December 31, 2018, it operated 20 self-built and 38 partnered data centers located in approximately 20 cities with 30,654 cabinets. It has a strategic partnership with Microsoft Corporation. 21Vianet Group, Inc. was founded in 1999 and is headquartered in Beijing, the People's Republic of China.

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