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

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Zscaler (ZS) closed the most recent trading day at $260.21, moving -0.81% from the previous trading session. This move lagged the S&P 500's daily loss of 0.1%. At the same time, the Dow lost 0.47%, and the tech-heavy Nasdaq lost 0.47%.

Prior to today's trading, shares of the cloud-based information security provider had lost 15.87% over the past month. This has lagged the Computer and Technology sector's loss of 1% and the S&P 500's gain of 3.67% in that time.

Wall Street will be looking for positivity from Zscaler as it approaches its next earnings report date. The company is expected to report EPS of $0.12, up 20% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $239.66 million, up 52.61% from the year-ago period.

ZS's full-year Zacks Consensus Estimates are calling for earnings of $0.52 per share and revenue of $1.01 billion. These results would represent year-over-year changes of 0% and +49.7%, respectively.

It is also important to note the recent changes to analyst estimates for Zscaler. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. Zscaler is currently a Zacks Rank #4 (Sell).

In terms of valuation, Zscaler is currently trading at a Forward P/E ratio of 508.14. This valuation marks a premium compared to its industry's average Forward P/E of 24.26.

Meanwhile, ZS's PEG ratio is currently 13.7. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. Internet - Services stocks are, on average, holding a PEG ratio of 3.12 based on yesterday's closing prices.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 213, putting it in the bottom 17% 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.

To follow ZS in the coming trading sessions, be sure to utilize Zacks.com.


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