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Zscaler (ZS) Stock Sinks As Market Gains: What You Should Know

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Zscaler (ZS - Free Report) closed at $44.36 in the latest trading session, marking a -1.42% move from the prior day. This move lagged the S&P 500's daily gain of 0.37%. Elsewhere, the Dow gained 0.42%, while the tech-heavy Nasdaq added 0.56%.

Prior to today's trading, shares of the cloud-based information security provider had lost 10.19% over the past month. This has lagged the Computer and Technology sector's gain of 5.93% and the S&P 500's gain of 4.42% in that time.

ZS will be looking to display strength as it nears its next earnings release. In that report, analysts expect ZS to post earnings of $0.01 per share. This would mark no growth from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $89.34 million, up 41.14% from the prior-year quarter.

ZS's full-year Zacks Consensus Estimates are calling for earnings of $0.14 per share and revenue of $401.72 million. These results would represent year-over-year changes of -36.36% and +32.65%, respectively.

It is also important to note the recent changes to analyst estimates for ZS. 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.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

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. Within the past 30 days, our consensus EPS projection remained stagnant. ZS is currently a Zacks Rank #3 (Hold).

Investors should also note ZS's current valuation metrics, including its Forward P/E ratio of 312.5. For comparison, its industry has an average Forward P/E of 28.03, which means ZS is trading at a premium to the group.

We can also see that ZS currently has a PEG ratio of 25.81. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Internet - Services industry currently had an average PEG ratio of 2.3 as of yesterday's close.

The Internet - Services industry is part of the Computer and Technology sector. This group has a Zacks Industry Rank of 153, putting it in the bottom 40% of all 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% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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