Should You Buy Zeta Global Stock Right Now?

Zeda Global stock has been soaring since April and it's up almost 31% year-to-date in 2026. Of course, I'm thrilled about that because I've ranked this stock as a buying opportunity all year long this year in 2026. But is it still a buying opportunity after the share price has almost doubled since April? Let me answer that question and let's go through the details together. I want to thank The Motley Fool for sponsoring this video. Visit fool.com/part Kev for the 10 best stocks to buy now. You can see the price action here for Zeda Global after starting off the year poorly and the share price falling to around $14 per share in April, it recovered and nearly doubled and the recent quarterly financial results truly pleased stock market investors. Investment banks upgraded the stock, increased the price targets, and the share price has been booming. Looking back at the business longer term, revenue growth has been excellent, increasing from around 400 million in 2021 up to nearly 1.6 billion in the most recent trailing 12-month period. That's good for roughly 4x in roughly 6 years. To make it more impressive, the company's operating profitability has improved dramatically. Since 2022, its operating margins jumped from -60% to 3.4%. This is true for a lot of tech companies since 2022. Many tech companies really cut costs, operated more lean, and were preparing for a recession in 2022, but thankfully a recession never happened, but profit margins for a lot of tech companies have improved dramatically since 2022. As they prepared for a recession, they cut costs, they stopped hiring as many individuals, and that's led to dramatically improving profitability in the tech industry. For Zeta Global, its returns on invested capital have also improved dramatically, but the number is still not great at negative point 22%. But as I've said before, I'm okay investing in companies that have negative profitability or negative returns on invested capital as long as they can demonstrate a path to profitability and show meaningful progress. And we're certainly seeing that from Zeta Global. Look at that trend line improvement from 2022 where it was negative 140% in this metric, improving all the way to nearly flat. >> [snorts] >> If the company continues on this trajectory, it's reasonable to assume its profitability will be comfortably above its weighted average cost of capital. So interestingly, Zeta Global's valuation has fluctuated dramatically since late 2023. It's now trading at a forward price to earnings of 22, which is near the average valuation the stock has traded for according to this metric going back several years. There was that brief moment wherein the valuation spiked and it was trading at a forward price to earnings of over 50, but that valuation came down. That was short-lived and for the better part of the previous two to three years, it's been trading near these valuations. I updated my discounted cash flow valuation for Zeta Global today, revising my free cash flow estimates higher for the company. Now revisions have been moving higher for Zeta Global since I've been following the stock and I now calculate a fair value estimate at $28.27. That's a little bit above the company's current market price of $26.64. I'm forecasting the company generates $260 million in free cash flow in 2026, which increases to $650 million by 2031. From that point forward, I expect continued growth in the company's free cash flow as they capitalize on industry tailwinds. I mentioned the weighted average cost of capital, which for Zeta Global stands at 12.4%. Typically, I like to see companies that have returns on invested capital that are above its weighted average cost of capital, but for younger, more growth stage companies like Zeta Global, I'm okay if their ROIC is temporarily lower than its weighted average cost of capital, as I mentioned earlier, as long as I'm seeing that trend line improvement, and I can see the probability of the company's profitability improving above their weighted average cost of capital. And since this is a relatively asset-light business model, it doesn't require very much capital to be reinvested in the business. I can see this company generating strong profits and profit margins longer term. That is if it continues on this trajectory, which is not for certain. I mentioned I've had Zeta Global stock rated as a buying opportunity all year long, and I last updated this rating on June 9th, 2026. So, today, after reviewing the company's latest results and looking at the most recent valuation, I'll be reiterating that buy rating for Zeta Global. I have a medium conviction level on this buy rating, and my conviction levels range from low, medium to high. I'm curious to know what you think about Zeta Global. Do you think it's a buying opportunity, or do you think it's time to take profits after the share price has nearly doubled since April? Let me know in the comment section.