Some Zscaler, Inc. (NASDAQ:ZS) shareholders are probably rather concerned to see the share price fall 50% over the last three months. But over the last year the share price action has been satisfactory. After all, the stock has performed better than the market's return of (16%) over the last year, and is up 19%.
Because Zscaler is loss-making, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually expect strong revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last year Zscaler saw its revenue grow by 59%. That's well above most other pre-profit companies. The solid 19% share price gain goes down pretty well, but it's not necessarily as good as you might expect given the top notch revenue growth. If that's the case, now might be the time to take a close look at Zscaler. Human beings have trouble conceptualizing (and valuing) exponential growth. Is that what we're seeing here?
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. So it makes a lot of sense to check out what analysts think Zscaler will earn in the future (free profit forecasts).
A Different Perspective
Zscaler shareholders should be happy with the total gain of 19% over the last twelve months. We regret to report that the share price is down 50% over ninety days. It may simply be that the share price got ahead of itself, although there may have been fundamental developments that are weighing on it. If you would like to research Zscaler in more detail then you might want to take a look at whether insiders have been buying or selling shares in the company.
Of course Zscaler may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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