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Zscaler (ZS) Dips More Than Broader Markets: What You Should Know

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In the latest trading session, Zscaler (ZS - Free Report) closed at $147.63, marking a -0.74% move from the previous day. This change lagged the S&P 500's 0.33% loss on the day. At the same time, the Dow lost 0.1%, and the tech-heavy Nasdaq lost 0.22%.

Coming into today, shares of the cloud-based information security provider had lost 17.93% in the past month. In that same time, the Computer and Technology sector lost 14.71%, while the S&P 500 lost 11.67%.

Zscaler will be looking to display strength as it nears its next earnings release. On that day, Zscaler is projected to report earnings of $0.26 per share, which would represent year-over-year growth of 85.71%. Our most recent consensus estimate is calling for quarterly revenue of $341.13 million, up 47.98% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $1.18 per share and revenue of $1.5 billion, which would represent changes of +71.01% and +37.47%, respectively, from the prior year.

Investors should also note any 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 1.87% higher. Zscaler is currently sporting a Zacks Rank of #2 (Buy).

Investors should also note Zscaler's current valuation metrics, including its Forward P/E ratio of 126.15. This valuation marks a premium compared to its industry's average Forward P/E of 19.69.

Meanwhile, ZS's PEG ratio is currently 2.79. 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. Internet - Services stocks are, on average, holding a PEG ratio of 1.66 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 53, which puts it in the top 22% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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