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

Zacks Equity Research

In the latest trading session, Zscaler (ZS) closed at $82, marking a -0.71% move from the previous day. This change lagged the S&P 500's 0.65% loss on the day. Elsewhere, the Dow lost 0.42%, while the tech-heavy Nasdaq lost 0.46%.

Prior to today's trading, shares of the cloud-based information security provider had gained 5.88% over the past month. This has outpaced the Computer and Technology sector's gain of 5.63% and the S&P 500's gain of 4.11% 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, up 200% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $82.15 million, up 46.26% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $0.17 per share and revenue of $297.53 million. These totals would mark changes of +230.77% and +56.45%, respectively, from last year.

Any recent changes to analyst estimates for ZS should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate remained stagnant within the past month. ZS is holding a Zacks Rank of #2 (Buy) right now.

Valuation is also important, so investors should note that ZS has a Forward P/E ratio of 476.48 right now. For comparison, its industry has an average Forward P/E of 28.76, which means ZS is trading at a premium to the group.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 99, putting it in the top 39% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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