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Zscaler (ZS) Laps the Stock Market: Here's Why

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Zscaler (ZS - Free Report) closed the most recent trading day at $199.54, moving +1.95% from the previous trading session. The stock's performance was ahead of the S&P 500's daily gain of 0.1%. Meanwhile, the Dow experienced a rise of 0.69%, and the technology-dominated Nasdaq saw an increase of 0.06%.

The the stock of cloud-based information security provider has fallen by 1.28% in the past month, lagging the Computer and Technology sector's gain of 4.92% and the S&P 500's gain of 4.37%.

Investors will be eagerly watching for the performance of Zscaler in its upcoming earnings disclosure. The company's earnings report is set to be unveiled on December 2, 2024. The company's earnings per share (EPS) are projected to be $0.63, reflecting a 5.97% decrease from the same quarter last year. Our most recent consensus estimate is calling for quarterly revenue of $605.68 million, up 21.94% from the year-ago period.

ZS's full-year Zacks Consensus Estimates are calling for earnings of $2.87 per share and revenue of $2.61 billion. These results would represent year-over-year changes of -10.03% and +20.57%, respectively.

It is also important to note the recent changes to analyst estimates for Zscaler. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Empirical research indicates that these revisions in estimates have a direct correlation with impending 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, running from #1 (Strong Buy) to #5 (Strong Sell), holds an admirable track record of superior performance, independently audited, with #1 stocks contributing an average annual return of +25% since 1988. Over the past month, there's been no change in the Zacks Consensus EPS estimate. Zscaler is currently sporting a Zacks Rank of #4 (Sell).

Looking at its valuation, Zscaler is holding a Forward P/E ratio of 68.18. This expresses a premium compared to the average Forward P/E of 31.33 of its industry.

Also, we should mention that ZS has a PEG ratio of 8.91. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. As of the close of trade yesterday, the Internet - Services industry held an average PEG ratio of 1.99.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 77, which puts it in the top 31% 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.

Keep in mind to rely on Zacks.com to watch all these stock-impacting metrics, and more, in the succeeding trading sessions.


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