Zscaler (ZS) Rises Higher Than Market: Key Facts

Market participants will be closely following the financial results of Zscaler in its upcoming release. On that day, Zscaler is projected to report earnings of $1.09 per share, which would represent year-over-year growth of 22.47%. In the meantime, our current consensus estimate forecasts the revenue to be $877.19 million, indicating a 21.96% growth compared to the corresponding quarter of the prior year.

ZS's full-year Zacks Consensus Estimates are calling for earnings of $4.14 per share and revenue of $3.33 billion. These results would represent year-over-year changes of +26.22% and +24.61%, respectively.

Investors should also note any recent changes to analyst estimates for Zscaler. These latest adjustments often mirror the shifting dynamics of short-term business patterns. Therefore, positive revisions in estimates convey analysts' confidence in the business performance and profit potential.

Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. Zscaler is holding a Zacks Rank of #4 (Sell) right now.

From a valuation perspective, Zscaler is currently exchanging hands at a Forward P/E ratio of 36.56. Its industry sports an average Forward P/E of 50.96, so one might conclude that Zscaler is trading at a discount comparatively.

One should further note that ZS currently holds a PEG ratio of 2.5. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Security was holding an average PEG ratio of 3.04 at yesterday's closing price.

The Security industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 159, putting it in the bottom 36% of all 250+ industries.

The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Remember to apply Zacks.com to follow these and more stock-moving metrics during the upcoming trading sessions.

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This article originally published on Zacks Investment Research (zacks.com).

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