Investor sentiment has cratered lately due to concerns that rising interest rates could shackle economic growth, in addition to 40-year high inflation and the unpredictable impacts of the war between Russia and Ukraine. The technology sector has hurt the most as investors flock to value-oriented stocks and safer assets in the wake of considerable uncertainty.

Zoom Video Communications (ZM -1.58%), a company that thrived during the pandemic, owing to global stay-at-home mandates, has tanked 64% over a six-month span as part of a broader tech sell-off.

The video-conferencing leader delivered strong results this past year, and although it may face some growing pains throughout 2022, the company enjoys a robust runway for growth in the future. As stocks continue to fall into a downward spiral, it'll pay off in the long run to look beyond the temporary noise for quality companies today.

Employees on video conference call in meeting room.

Image source: Getty Images.

Zoom is well-positioned financially

Contrary to what its share price activity may suggest, the world's leading video-conferencing platform had a strong outing this past year. The company reported total revenues of $4.1 billion in fiscal 2022, translating to 55% growth, and adjusted earnings per share climbed 52% to $5.07.

Expanding its customer base has been a smooth ride as well. As of its most recent quarter, the number of customers contributing more than $100,000 in annual recurring revenue (ARR) grew 66% year over year to 2,725. Ending the year with $1.6 billion in adjusted free cash flow, Zoom's business is proving to be quite profitable.

Investors should expect some minor growth hiccups in 2022. Analysts' forecasts suggest Zoom's top line will reach $4.6 billion this fiscal year, up 11%. On the earnings front, Wall Street expects the company to generate a bottom line of $3.53 per share, representing a 30% drop from the previous period.

No need to fret, however. The global video-conferencing market is projected to register a compound annual growth rate (CAGR) of 16% through 2028, up to $24.4 billion. Zoom currently dominates the United States and the United Kingdom with a market share north of 50%, confirming the company is in an advantageous position to sustain further growth down the line. If the company can maintain 40% of the global market by 2028, it would generate annual sales of $9.8 billion, more than doubling from last year's figure. Short-term growth hurdles are inevitable for most companies, which is why it's important to maintain a long investment time horizon.

Zoom looks like a value play

The ongoing pullback has gifted Zoom a handsome valuation. The video-conferencing stock is trading at 21.5 times earnings as of this writing, just about the lowest price-to-earnings multiple it has pegged since going public in 2019.

ZM PE Ratio Chart

Data by YCharts.

When looking at the company's pre-COVID financial performance, it generated far fewer profits and less cash flow than it does at the moment. Now that all gains made during the pandemic have been erased, despite improving its business across the board, Zoom stock appears to be cheaply valued.

Should you buy Zoom right now?

Naturally, Zoom benefited from COVID-related shutdowns, but that's not to say the company doesn't have a promising future. When everybody else falls out of love with a fundamentally sound stock, that should serve as a firm buying signal to prudent investors.

Zoom has only enhanced its business since the beginning of the pandemic, and still, it has been punished with a massive sell-off of its shares. Long-term investors willing to endure the ongoing volatility and focus on the underlying fundamentals of a company should seriously consider the video-conferencing juggernaut today.