Zscaler (ZS) Exceeds Market Returns: Some Facts to Consider

The most recent trading session ended with Zscaler (ZS) positioned at $198.26, reflecting a change of +1.41% from the previous trading close. The stock outperformed the S&P 500, which posted a daily gain of 0.61%. Elsewhere, the Dow gained 0.97%, while the tech-heavy Nasdaq rose 0.33%.

Shares of the cloud-based information security provider have gained 17.27% over the past month, outpacing the Computer and Technology sector’s gain of 8.6% and the S&P 500’s gain of 5.36%.

Zscaler’s upcoming earnings release will be of great interest to investors. The company’s next EPS is projected at $0.63, meaning a drop of 5.97% compared to the same quarter last year. Our most recent consensus estimate is calling for quarterly revenue of $605.68 million, an increase of 21.94% from the year-ago period.

For the full-year period, Zacks Consensus Estimates anticipate earnings of $2.87 per share and revenue of $2.61 billion, meaning changes of -10.03% and +20.57%, respectively, in compared to last year.

Investors may also notice recent changes to analyst estimates for Zscaler. Recent revisions tend to reflect the latest short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company’s business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can profit from this by using the Zacks Rank. This model accounts for these changes in estimates and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past 30 days, our consensus EPS projection has fallen 2.92%. Zscaler currently sports a Zacks Rank of #3 (Hold).

Investors should also note Zscaler’s current valuation metrics, including its Forward P/E ratio of 68.1. This represents a premium compared to the industry’s average forward P/E of 36.6.

Meanwhile, ZS’s PEG ratio is currently 8.9. Comparable to the widely accepted P/E ratio, the PEG ratio is also responsible for the company’s projected earnings growth. ZS Industry had an average PEG ratio of 2.28 at yesterday’s close.

The Internet – Services industry is part of the IT and Technology sector. This industry currently has a Zacks Industry Rank of 90, putting it in the top 36% of over 250 industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% of industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics and more on Zacks.com.

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