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Zscaler (ZS) Flat As Market Gains: What You Should Know

Zacks Equity Research

Zscaler (ZS) closed at $84 in the latest trading session, marking no change from the prior day. This change lagged the S&P 500's daily gain of 0.69%. Elsewhere, the Dow gained 0.65%, while the tech-heavy Nasdaq added 0.58%.

Heading into today, shares of the cloud-based information security provider had gained 11.32% over the past month, outpacing the Computer and Technology sector's gain of 2.27% and the S&P 500's gain of 1.36% in that time.

Wall Street will be looking for positivity from ZS as it approaches its next earnings report date. In that report, analysts expect ZS to post earnings of $0.01 per share. This would mark year-over-year growth of 200%. Meanwhile, our latest consensus estimate is calling for revenue of $82.15 million, up 46.26% from the prior-year quarter.

ZS's full-year Zacks Consensus Estimates are calling for earnings of $0.17 per share and revenue of $297.53 million. These results would represent year-over-year changes of +230.77% and +56.45%, respectively.

It is also important to note the recent changes to analyst estimates for ZS. These revisions typically reflect the latest short-term business trends, which can change frequently. 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. 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.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. ZS is currently sporting a Zacks Rank of #2 (Buy).

In terms of valuation, ZS is currently trading at a Forward P/E ratio of 484.61. Its industry sports an average Forward P/E of 28.51, so we one might conclude that ZS is trading at a premium comparatively.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 103, putting it in the top 41% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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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