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7 Reasons Why You Should Invest in Zscaler (ZS) Stock Now
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Zscaler (ZS - Free Report) is one of the stocks that investors can currently add to their portfolio to counter the highly volatile market conditions and benefit from its upside potential.
Wall Street continues to witness high volatility due to vicious macro challenges, ranging from the COVID-led supply crisis and war in Ukraine to rising inflation and interest rate pressure. With the continued fear of the impact of Federal Reserve's aggressively raising interest rate policy, global investors are panicking about getting into the market right now.
All major stock indices are in negative territory year to date. The Dow Industrial, Nasdaq and S&P 500 have plunged 9.1%, 33% and 19.8%, respectively, year to date. In such a scenario, top-ranked stocks like Zscaler can boost one's portfolio.
Why ZS is an Attractive Pick?
Trading Way Below 52-Week High: ZS stock is currently trading lower than its 52-week high, which reflects its potential to go upward. The stock’s closing price of $109.36 on Dec 22 was 67% lower than the 52-week high of $332.50 attained on Dec 27, 2021. Shares of Zscaler have plunged 66% year to date compared with the Zacks Internet-Services industry’s decline of 40.1%.
Attractive Valuation: ZS currently trades at an attractive valuation multiple. The stock trades at one-year forward price-to-sales of 9.28X compared with its five-year average of 22.32X.
Solid Rank & Growth Score: Zscaler currently has a Zacks Rank #2 (Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities to investors. Thus, the company appears to be a compelling investment proposition at the moment.
Northward Estimate Revisions: The direction of estimate revisions serves a key role when it comes to the price of a stock. Analysts have raised the estimates for Zscaler’s fiscal 2023 and fiscal 2024 over the past 30 days, reflecting their confidence in the company. Over the past 30 days, consensus mark for fiscal 2023 and fiscal 2024 earnings moved north by 6 cents and 3 cents, respectively.
Positive Earnings Surprise History: Zscaler has an impressive earnings surprise history. The company outpaced estimates in each of the trailing four quarters, the average earnings surprise being 27.3%.
Strong Growth Prospects: The Zacks Consensus Estimate of $1.23 for fiscal 2023 earnings suggests growth of 78.3% from the year-ago period. For fiscal 2024, earnings are expected to increase 37.1% year over year and are likely to reach $1.68 per share. The long-term earnings per share growth rate is estimated to be 46.5%, better than the Zacks Internet-Services industry’s 20.5%.
Robust Fundamental Growth Drivers: Zscaler is benefiting from the rising demand for cyber-security solutions owing to the slew of data breaches in the ongoing online and remote work wave across the globe. Spurring demand for privileged access security on digital transformation and cloud-migration strategies among leading clients has been a key growth driver for the company.
The growing adoption of Software-Defined Wide Area Network (SD-WAN) solutions is anticipated to be a key growth driver for Zscaler over the long run. MarketsAndMarkets predicts that the market size for SD-WAN solutions could reach $13.7 billion in 2027 from $3.4 billion in 2022, indicating a CAGR of 31.9%. As there are only few vendors that offer security and SD-WAN solutions, Zscaler is well positioned to capitalize on the increasing opportunities in the market.
Zscaler revealed innovations to accelerate enterprise data protection programs from months to hours with zero configuration for data loss prevention (DLP) in October this year. With the enterprise DLP solution natively integrated into the Zscaler Zero Trust Exchange (ZTE), a complete security service edge is made available to the security teams which provides equal protection irrespective of the users’ and data locations.
The newly updated ZTE platform features AI-powered phishing prevention to detect and block credential theft and browser exploitation from phishing pages, and AI-powered segmentation to simplify user-to-app segmentation while minimizing attack surfaces and stopping lateral movement with AI-based policy recommendations. Further, Zscaler’s new upgrade features AI-powered root cause analysis that instantly identifies root causes of poor user experiences 180 times faster and enables security teams to focus more on blocking attacks and less on time-consuming troubleshooting issues.
Last week, the company joined the Joint Cyber Defense Collaborative, established by the Cybersecurity and Infrastructure Security Agency of the U.S. Department of Homeland Security, to enhance the collective cybersecurity posture of the U.S. and strategic international partners. Being a JCDC member, Zscaler’s ThreatLabz will actively track various threat actor groups behind the scenes keeping up with their tools, techniques and procedures as well as command and control infrastructure to develop effective countermeasures. This will enable JCDC and its partners to increase situational awareness and understanding of cyber defense against some of the most advanced global threats.
The Zacks Consensus Estimate for AudioCodes' fourth-quarter 2022 earnings has been revised 4 cents north to 39 cents per share over the past 60 days. For 2022, earnings estimates have moved south by a penny to $1.39 per share in the past 60 days.
AUDC's earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed the rest, the average surprise being negative 5.4%. Shares of the company have declined 48.7% in the year to date.
The Zacks Consensus Estimate for Celestica’s fourth-quarter 2022 earnings has increased by 9 cents to 53 cents per share over the past 60 days. For 2022, earnings estimates have risen 16 cents to $1.86 per share in the past 60 days.
CLS' earnings beat the Zacks Consensus Estimate in all the preceding four quarters, the average surprise being 11.8%. Shares of the company have decreased 2.6% in the year to date.
The Zacks Consensus Estimate for Fabrinet's second-quarter fiscal 2023 earnings has been revised 16 cents northward to $1.89 per share over the past 60 days. For fiscal 2023, earnings estimates have improved by 7.6% to $7.48 per share in the past 60 days.
FN’s earnings beat the Zacks Consensus Estimate in three of the preceding four quarters and missed the same once, the average surprise being 5.4%. Shares of the company have risen 8.3% in the year to date.
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7 Reasons Why You Should Invest in Zscaler (ZS) Stock Now
Zscaler (ZS - Free Report) is one of the stocks that investors can currently add to their portfolio to counter the highly volatile market conditions and benefit from its upside potential.
Wall Street continues to witness high volatility due to vicious macro challenges, ranging from the COVID-led supply crisis and war in Ukraine to rising inflation and interest rate pressure. With the continued fear of the impact of Federal Reserve's aggressively raising interest rate policy, global investors are panicking about getting into the market right now.
All major stock indices are in negative territory year to date. The Dow Industrial, Nasdaq and S&P 500 have plunged 9.1%, 33% and 19.8%, respectively, year to date. In such a scenario, top-ranked stocks like Zscaler can boost one's portfolio.
Why ZS is an Attractive Pick?
Trading Way Below 52-Week High: ZS stock is currently trading lower than its 52-week high, which reflects its potential to go upward. The stock’s closing price of $109.36 on Dec 22 was 67% lower than the 52-week high of $332.50 attained on Dec 27, 2021. Shares of Zscaler have plunged 66% year to date compared with the Zacks Internet-Services industry’s decline of 40.1%.
Attractive Valuation: ZS currently trades at an attractive valuation multiple. The stock trades at one-year forward price-to-sales of 9.28X compared with its five-year average of 22.32X.
Zscaler, Inc. Price and Consensus
Zscaler, Inc. price-consensus-chart | Zscaler, Inc. Quote
Solid Rank & Growth Score: Zscaler currently has a Zacks Rank #2 (Buy) and a VGM Score of B. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities to investors. Thus, the company appears to be a compelling investment proposition at the moment.
Northward Estimate Revisions: The direction of estimate revisions serves a key role when it comes to the price of a stock. Analysts have raised the estimates for Zscaler’s fiscal 2023 and fiscal 2024 over the past 30 days, reflecting their confidence in the company. Over the past 30 days, consensus mark for fiscal 2023 and fiscal 2024 earnings moved north by 6 cents and 3 cents, respectively.
Positive Earnings Surprise History: Zscaler has an impressive earnings surprise history. The company outpaced estimates in each of the trailing four quarters, the average earnings surprise being 27.3%.
Strong Growth Prospects: The Zacks Consensus Estimate of $1.23 for fiscal 2023 earnings suggests growth of 78.3% from the year-ago period. For fiscal 2024, earnings are expected to increase 37.1% year over year and are likely to reach $1.68 per share. The long-term earnings per share growth rate is estimated to be 46.5%, better than the Zacks Internet-Services industry’s 20.5%.
Robust Fundamental Growth Drivers: Zscaler is benefiting from the rising demand for cyber-security solutions owing to the slew of data breaches in the ongoing online and remote work wave across the globe. Spurring demand for privileged access security on digital transformation and cloud-migration strategies among leading clients has been a key growth driver for the company.
The growing adoption of Software-Defined Wide Area Network (SD-WAN) solutions is anticipated to be a key growth driver for Zscaler over the long run. MarketsAndMarkets predicts that the market size for SD-WAN solutions could reach $13.7 billion in 2027 from $3.4 billion in 2022, indicating a CAGR of 31.9%. As there are only few vendors that offer security and SD-WAN solutions, Zscaler is well positioned to capitalize on the increasing opportunities in the market.
Zscaler revealed innovations to accelerate enterprise data protection programs from months to hours with zero configuration for data loss prevention (DLP) in October this year. With the enterprise DLP solution natively integrated into the Zscaler Zero Trust Exchange (ZTE), a complete security service edge is made available to the security teams which provides equal protection irrespective of the users’ and data locations.
The newly updated ZTE platform features AI-powered phishing prevention to detect and block credential theft and browser exploitation from phishing pages, and AI-powered segmentation to simplify user-to-app segmentation while minimizing attack surfaces and stopping lateral movement with AI-based policy recommendations. Further, Zscaler’s new upgrade features AI-powered root cause analysis that instantly identifies root causes of poor user experiences 180 times faster and enables security teams to focus more on blocking attacks and less on time-consuming troubleshooting issues.
Last week, the company joined the Joint Cyber Defense Collaborative, established by the Cybersecurity and Infrastructure Security Agency of the U.S. Department of Homeland Security, to enhance the collective cybersecurity posture of the U.S. and strategic international partners. Being a JCDC member, Zscaler’s ThreatLabz will actively track various threat actor groups behind the scenes keeping up with their tools, techniques and procedures as well as command and control infrastructure to develop effective countermeasures. This will enable JCDC and its partners to increase situational awareness and understanding of cyber defense against some of the most advanced global threats.
Other Key Picks
Some other top-ranked stocks from the broader Computer and Technology sector are AudioCodes (AUDC - Free Report) , Celestica (CLS - Free Report) and Fabrinet (FN - Free Report) . While AudioCodes and Celestica each sport a Zacks Rank #1 , Fabrinet carries a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AudioCodes' fourth-quarter 2022 earnings has been revised 4 cents north to 39 cents per share over the past 60 days. For 2022, earnings estimates have moved south by a penny to $1.39 per share in the past 60 days.
AUDC's earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed the rest, the average surprise being negative 5.4%. Shares of the company have declined 48.7% in the year to date.
The Zacks Consensus Estimate for Celestica’s fourth-quarter 2022 earnings has increased by 9 cents to 53 cents per share over the past 60 days. For 2022, earnings estimates have risen 16 cents to $1.86 per share in the past 60 days.
CLS' earnings beat the Zacks Consensus Estimate in all the preceding four quarters, the average surprise being 11.8%. Shares of the company have decreased 2.6% in the year to date.
The Zacks Consensus Estimate for Fabrinet's second-quarter fiscal 2023 earnings has been revised 16 cents northward to $1.89 per share over the past 60 days. For fiscal 2023, earnings estimates have improved by 7.6% to $7.48 per share in the past 60 days.
FN’s earnings beat the Zacks Consensus Estimate in three of the preceding four quarters and missed the same once, the average surprise being 5.4%. Shares of the company have risen 8.3% in the year to date.