U.S. Markets close in 2 hrs 21 mins

Zscaler (ZS) Gains But Lags Market: What You Should Know

Zacks Equity Research

In the latest trading session, Zscaler (ZS) closed at $71.78, marking a +0.7% move from the previous day. This change lagged the S&P 500's 1.1% gain on the day. Meanwhile, the Dow gained 1.05%, and the Nasdaq, a tech-heavy index, added 1.32%.

Heading into today, shares of the cloud-based information security provider had lost 17.52% over the past month, lagging the Computer and Technology sector's loss of 5.47% and the S&P 500's loss of 5.05% in that time.

ZS will be looking to display strength as it nears its next earnings release, which is expected to be September 10, 2019. 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.

Investors might also notice 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.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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. The Zacks Consensus EPS estimate remained stagnant within the past month. ZS is holding a Zacks Rank of #3 (Hold) right now.

In terms of valuation, ZS is currently trading at a Forward P/E ratio of 388.8. This represents a premium compared to its industry's average Forward P/E of 26.64.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 167, putting it in the bottom 35% 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.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Zscaler, Inc. (ZS) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research