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Zscaler (ZS) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

Zscaler (ZS) closed the most recent trading day at $52.06, moving +0.77% from the previous trading session. The stock outpaced the S&P 500's daily gain of 0.42%. Elsewhere, the Dow gained 0.15%, while the tech-heavy Nasdaq added 0.66%.

Prior to today's trading, shares of the cloud-based information security provider had gained 19.81% over the past month. This has outpaced the Computer and Technology sector's gain of 4.8% and the S&P 500's gain of 4.09% in that time.

ZS will be looking to display strength as it nears its next earnings release, which 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. Meanwhile, our latest consensus estimate is calling for revenue of $89.34 million, up 41.14% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $0.14 per share and revenue of $401.31 million. These totals would mark changes of -36.36% and +32.52%, respectively, from last year.

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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 currently a Zacks Rank #3 (Hold).

Looking at its valuation, ZS is holding a Forward P/E ratio of 369. This represents a premium compared to its industry's average Forward P/E of 29.34.

Investors should also note that ZS has a PEG ratio of 11.41 right now. 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. ZS's industry had an average PEG ratio of 2.83 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 84, which puts it in the top 33% 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.

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

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