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

Zacks Equity Research

Zscaler (ZS) closed at $46.60 in the latest trading session, marking a +0.82% move from the prior day. This move outpaced the S&P 500's daily loss of 0.38%. Elsewhere, the Dow lost 0.4%, while the tech-heavy Nasdaq lost 0.51%.

Coming into today, shares of the cloud-based information security provider had gained 13.42% in the past month. In that same time, the Computer and Technology sector gained 6.31%, while the S&P 500 gained 4.7%.

Wall Street will be looking for positivity from ZS as it approaches its next earnings report date. This is expected to be December 3, 2019. On that day, ZS is projected to report earnings of $0.01 per share, which would represent no growth from the year-ago period. Our most recent consensus estimate is calling for quarterly revenue of $89.34 million, up 41.14% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.14 per share and revenue of $401.72 million, which would represent changes of -36.36% and +32.65%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for ZS. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about 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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. ZS is currently sporting a Zacks Rank of #3 (Hold).

Digging into valuation, ZS currently has a Forward P/E ratio of 320.97. This represents a premium compared to its industry's average Forward P/E of 29.23.

Meanwhile, ZS's PEG ratio is currently 26.5. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Internet - Services industry currently had an average PEG ratio of 2.55 as of yesterday's close.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 69, which puts it in the top 28% 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.

To follow ZS in the coming trading sessions, be sure to utilize Zacks.com.


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