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Zscaler (ZS) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

Zscaler (ZS) closed at $45.65 in the latest trading session, marking a -1.58% move from the prior day. This change lagged the S&P 500's daily loss of 0.2%. Elsewhere, the Dow lost 0.08%, while the tech-heavy Nasdaq lost 0.3%.

Prior to today's trading, shares of the cloud-based information security provider had lost 8.4% over the past month. This has lagged the Computer and Technology sector's gain of 0.91% and the S&P 500's loss of 0.25% in that time.

Investors will be hoping for strength from ZS as it approaches its next earnings release. The company is expected to report EPS of $0.01, unchanged from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $89.34 million, up 41.14% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.14 per share and revenue of $401.72 million, which would represent changes of -36.36% and +32.65%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for ZS. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 7.46% lower. ZS is holding a Zacks Rank of #3 (Hold) right now.

Valuation is also important, so investors should note that ZS has a Forward P/E ratio of 322.12 right now. This valuation marks a premium compared to its industry's average Forward P/E of 28.23.

Meanwhile, ZS's PEG ratio is currently 26.6. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ZS's industry had an average PEG ratio of 2.4 as of yesterday's close.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 155, which puts it in the bottom 40% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks. Com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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