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

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Zscaler (ZS) closed the most recent trading day at $150.82, moving +1% from the previous trading session. This move outpaced the S&P 500's daily loss of 0.84%. At the same time, the Dow lost 0.69%, and the tech-heavy Nasdaq lost 0.07%.

Heading into today, shares of the cloud-based information security provider had gained 3.54% over the past month, outpacing the Computer and Technology sector's gain of 1.72% and the S&P 500's gain of 2.02% in that time.

Zscaler will be looking to display strength as it nears its next earnings release. In that report, analysts expect Zscaler to post earnings of $0.20 per share. This would mark year-over-year growth of 42.86%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $305.64 million, up 55.09% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $0.65 per share and revenue of $1.08 billion. These totals would mark changes of +25% and +60.23%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for Zscaler. 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 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 has moved 0.38% higher. Zscaler is holding a Zacks Rank of #3 (Hold) right now.

In terms of valuation, Zscaler is currently trading at a Forward P/E ratio of 231.3. For comparison, its industry has an average Forward P/E of 19.59, which means Zscaler is trading at a premium to the group.

Investors should also note that ZS has a PEG ratio of 4.87 right now. 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 1.51 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 163, which puts it in the bottom 36% 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.

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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