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Why Zscaler (ZS) Outpaced the Stock Market Today

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Zscaler (ZS - Free Report) closed the latest trading day at $179.35, indicating a +1.47% change from the previous session's end. This move outpaced the S&P 500's daily gain of 1.08%. Meanwhile, the Dow experienced a rise of 0.75%, and the technology-dominated Nasdaq saw an increase of 2.64%.

The the stock of cloud-based information security provider has fallen by 10.12% in the past month, lagging the Computer and Technology sector's loss of 5.77% and the S&P 500's loss of 0.44%.

The investment community will be paying close attention to the earnings performance of Zscaler in its upcoming release. In that report, analysts expect Zscaler to post earnings of $0.69 per share. This would mark year-over-year growth of 7.81%. Meanwhile, our latest consensus estimate is calling for revenue of $567.11 million, up 24.64% from the prior-year quarter.

For the full year, the Zacks Consensus Estimates project earnings of $2.99 per share and a revenue of $2.14 billion, demonstrating changes of +67.04% and +32.39%, respectively, from the preceding year.

It's also important for investors to be aware of any recent modifications to analyst estimates for Zscaler. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Empirical research indicates that these revisions in estimates have a direct correlation with impending stock price performance. To utilize this, we have created the Zacks Rank, a proprietary model that integrates these estimate changes and provides a functional 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. The Zacks Consensus EPS estimate has moved 0.26% higher within the past month. Zscaler is holding a Zacks Rank of #3 (Hold) right now.

Looking at its valuation, Zscaler is holding a Forward P/E ratio of 59.14. This signifies a premium in comparison to the average Forward P/E of 22.35 for its industry.

Investors should also note that ZS has a PEG ratio of 2.24 right now. The PEG ratio bears resemblance to the frequently used P/E ratio, but this parameter also includes the company's expected earnings growth trajectory. The Internet - Services was holding an average PEG ratio of 2.06 at yesterday's closing price.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 160, putting it in the bottom 37% of all 250+ industries.

The Zacks Industry Rank is ordered from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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