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

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Zscaler (ZS) closed at $254.74 in the latest trading session, marking a +1.7% move from the prior day. This move outpaced the S&P 500's daily gain of 0.08%. Elsewhere, the Dow lost 0.56%, while the tech-heavy Nasdaq lost 0.28%.

Heading into today, shares of the cloud-based information security provider had lost 15.17% over the past month, lagging the Computer and Technology sector's loss of 5.11% and the S&P 500's gain of 0.22% in that time.

Wall Street will be looking for positivity from Zscaler as it approaches its next earnings report date. In that report, analysts expect Zscaler to post earnings of $0.12 per share. This would mark year-over-year growth of 20%. Meanwhile, our latest consensus estimate is calling for revenue of $239.66 million, up 52.61% from the prior-year quarter.

ZS's full-year Zacks Consensus Estimates are calling for earnings of $0.52 per share and revenue of $1.01 billion. These results would represent year-over-year changes of 0% and +49.7%, respectively.

It is also important to note the recent changes to analyst estimates for Zscaler. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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.

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. The Zacks Consensus EPS estimate remained stagnant within the past month. Zscaler is currently a Zacks Rank #4 (Sell).

Investors should also note Zscaler's current valuation metrics, including its Forward P/E ratio of 485.17. This represents a premium compared to its industry's average Forward P/E of 24.33.

It is also worth noting that ZS currently has a PEG ratio of 13.08. 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 2.87 as of yesterday's close.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 209, putting it in the bottom 19% 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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