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

Zacks Equity Research
·3 mins read

Zscaler (ZS) closed at $147.68 in the latest trading session, marking a +1.49% move from the prior day. This change lagged the S&P 500's 1.74% gain on the day. Elsewhere, the Dow gained 1.91%, while the tech-heavy Nasdaq added 1.88%.

Prior to today's trading, shares of the cloud-based information security provider had gained 9.27% over the past month. This has outpaced the Computer and Technology sector's loss of 1.67% and the S&P 500's loss of 1.86% in that time.

ZS will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.06, up 100% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $132.38 million, up 41.45% from the year-ago period.

ZS's full-year Zacks Consensus Estimates are calling for earnings of $0.29 per share and revenue of $588.87 million. These results would represent year-over-year changes of +20.83% and +36.54%, respectively.

Investors should also note any recent changes to analyst estimates for ZS. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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.

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. Within the past 30 days, our consensus EPS projection has moved 83.26% lower. ZS is currently a Zacks Rank #5 (Strong Sell).

Investors should also note ZS's current valuation metrics, including its Forward P/E ratio of 503.69. This represents a premium compared to its industry's average Forward P/E of 38.23.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 124, which puts it in the top 50% 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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