If you’ve owned Zoom Video Communications (NASDAQ:ZM) since the beginning of the pandemic in early 2020 and still own ZM stock today, it’s been quite a ride — a 287% ride up, that is.

I’m sure I’ve recommended the video conferencing stock in one of my gallery articles. But for the life of me, I can’t remember when that was. But I’m reasonably confident it wasn’t in 2021.

No matter.

On Sept. 30, Zoom and Five9 called off their $14.7-billion merger after regulatory concerns and Five9 shareholder opposition to the price offered, effectively stopping the deal in its tracks.

Despite the news, ZM stock has pushed higher in October, a sign that investors are excited about its plans to deliver its contact center software in 2022.

As a result of losing more than half its value over the 12 months, Zoom’s share price is a lot more palatable.

Under $275, ZM stock appears to be a buy. Here’s why.

ZM Stock and Free Cash Flow

Where possible, I like to see companies growing their free cash flow (FCF). It’s a sign of a healthy business. Zoom is definitely increasing its FCF. As of the second quarter ended July 31, it had a trailing 12-month FCF of $1.67 billion, 20.1% higher than fiscal 2021 and 1,400.2% higher than fiscal 2020.

InvestorPlace’s Mark Hake recently discussed this very issue suggesting that its 45% FCF margins could stick around post-pandemic. However, Hake points out that its TTM FCF margin was even better at 46% over the past year. That’s very healthy.

By comparison, Apple (NASDAQ:AAPL), which would never be confused with an FCF laggard, had TTM FCF of $94.8 billion, $347.2 billion in TTM revenue, and an FCF margin of 27%, 41% less than Zoom.

In terms of FCF yield, Apple’s is currently 3.8%, based on $5.57 FCF per share divided by $147. Zoom’s is 2.0% ($5.52 FCF per share divided by $275).

There’s no question that Apple still provides growth at a reasonable price. Investors like my colleague are contemplating life after the pandemic fades and the work world returns to some form of normal.

Where does that leave Zoom?

Hake points out that the average target price of Zoom stock is just under $375. That’s a Yahoo Finance figure. MarketWatch.com has a slightly less enthusiastic view. It shows a median and average price target of $359.50 and $347.78, respectively. The 26 analysts covering its stock rate it overweight [12 buy, 1 overweight, 12 hold, 1 sell].

In terms of estimates, it’s showing $4.83 in 2022 and $4.74 in 2022. So, the consensus is that Zoom’s profitability will moderate over the next 18 months.

Zoom’s Got a Plan

After the termination of the merger, it made sense for CEO and founder Eric Yuan to layout Zoom’s overall plan for the future. He did that in a Sept. 30 blog post.

Highlights of the post include:

• Zoom Phone has expanded to more than 40 countries. The product provides users with end-to-end encryption and video voicemail.
• As I mentioned earlier, the company’s Video Engagement Center cloud-based contact center solution will be available for customers in early 2022. It is intended to be easy to use, providing a more engaging experience. In addition, it will continue to work with partners such as Five9 on integrations for its contact center solution.
• Zoom Events will continue to evolve and grow. This fall, its newest event type is Zoom Events Conference, allowing its customers to hold multi-day virtual events easily.

“The world is entering a new era for communications and collaboration. The Zoom platform is continuing to transform the trajectory of communications by advancing the way we connect, share ideas, and get more done together — regardless of location,” Yuan wrote.

When you get time, read Yuan’s post. He’s got a plan.

The Bottom Line

I don’t think there’s any doubt that Zoom’s business is much stronger today than it was at the beginning of the pandemic. That said, there is no way of knowing if the company would have seen such marked improvement without all the work-from-home orders.

So, when investors speculate that business will slow once the world returns to normal, that assumes “normal” will be 100% in-office participation. I don’t see how that plays out.

Do you remember when business casual was some crazy idea to keep employees happy? Well, you don’t see many suits these days, and when you do, it’s a sartorial choice more than command-and-control.

I see the same thing happening when it comes to offices. A hybrid will develop that meets the needs of all stakeholders. From this perspective, there’s plenty of business still available for Zoom to capture.

Under $275, I think you’ll be delighted in two-to-three years. So ZM stock is a long-term buy.

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.