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Zscaler (ZS) Gains But Lags Market: What You Should Know

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In the latest trading session, Zscaler (ZS - Free Report) closed at $214.76, marking a +1.3% move from the previous day. This move lagged the S&P 500's daily gain of 1.39%. Meanwhile, the Dow gained 0.83%, and the Nasdaq, a tech-heavy index, added 1.97%.

Prior to today's trading, shares of the cloud-based information security provider had gained 2.52% over the past month. This has lagged the Computer and Technology sector's gain of 3.17% and the S&P 500's gain of 2.58% in that time.

ZS will be looking to display strength as it nears its next earnings release. On that day, ZS is projected to report earnings of $0.08 per share, which would represent a year-over-year decline of 11.11%. Meanwhile, our latest consensus estimate is calling for revenue of $147.34 million, up 45.49% from the prior-year quarter.

ZS's full-year Zacks Consensus Estimates are calling for earnings of $0.38 per share and revenue of $611.78 million. These results would represent year-over-year changes of +58.33% and +41.86%, respectively.

Investors should also note any recent changes to analyst estimates for ZS. These revisions help to show the ever-changing nature of near-term business trends. 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. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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. Over the past month, the Zacks Consensus EPS estimate remained stagnant. ZS is currently a Zacks Rank #2 (Buy).

Looking at its valuation, ZS is holding a Forward P/E ratio of 549.64. For comparison, its industry has an average Forward P/E of 33.93, which means ZS is trading at a premium to the group.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 104, putting it in the top 41% 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.

To follow ZS in the coming trading sessions, be sure to utilize Zacks.com.


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