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

Zscaler (ZS) closed at $165.65 in the latest trading session, marking a +0.18% move from the prior day. The stock lagged the S&P 500's daily gain of 0.29%. Elsewhere, the Dow gained 0.18%, while the tech-heavy Nasdaq added 0.07%.

Heading into today, shares of the cloud-based information security provider had gained 16.49% over the past month, outpacing the Computer and Technology sector's gain of 4.21% and the S&P 500's gain of 4.36% in that time.

Zscaler will be looking to display strength as it nears its next earnings release, which is expected to be September 8, 2022. In that report, analysts expect Zscaler to post earnings of $0.20 per share. This would mark year-over-year growth of 42.86%. Our most recent consensus estimate is calling for quarterly revenue of $305.64 million, up 55.09% from the year-ago period.

Investors might also notice recent changes to analyst estimates for Zscaler. These recent revisions tend to reflect the evolving nature of short-term business trends. 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

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 currently has a Zacks Rank of #3 (Hold).

Looking at its valuation, Zscaler is holding a Forward P/E ratio of 160.53. Its industry sports an average Forward P/E of 22, so we one might conclude that Zscaler is trading at a premium comparatively.

It is also worth noting that ZS currently has a PEG ratio of 3.38. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. Internet - Services stocks are, on average, holding a PEG ratio of 2.6 based on yesterday's closing prices.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 76, which puts it in the top 31% 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.

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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