Zscaler Inc (NASDAQ:ZS): Poised For Long-Term Success?
Zscaler Inc’s (NASDAQ:ZS) latest earnings update in July 2018 showed company earnings became less negative compared to the previous year’s level – great news for investors Below, I’ve laid out key numbers on how market analysts predict Zscaler’s earnings growth outlook over the next couple of years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Check out our latest analysis for Zscaler
Analysts’ expectations for next year seems pessimistic, with earnings becoming even more negative, reaching -US$44.8m in 2019. In addition, earnings are predicted to fall off in the following year, decreasing to -US$32.1m in 2020 and -US$18.4m in 2021.
While it’s useful to understand the growth year by year relative to today’s level, it may be more beneficial analyzing the rate at which the business is growing every year, on average. The advantage of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Zscaler’s earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 20.4%. This means that, we can assume Zscaler will grow its earnings by 20.4% every year for the next few years.
Next Steps:
For Zscaler, I’ve put together three pertinent factors you should further research:
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Valuation: What is ZS worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether ZS is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ZS? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
