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

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Zscaler (ZS - Free Report) closed the most recent trading day at $44.07, moving +0.39% from the previous trading session. This change outpaced the S&P 500's 0.2% loss on the day. At the same time, the Dow added 0.04%, and the tech-heavy Nasdaq lost 0.13%.

Coming into today, shares of the cloud-based information security provider had lost 7.19% in the past month. In that same time, the Computer and Technology sector gained 8.71%, while the S&P 500 gained 7.08%.

Investors will be hoping for strength from ZS as it approaches its next earnings release, which is expected to be December 3, 2019. The company is expected to report EPS of $0.01, unchanged 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.

Investors might also notice recent changes to analyst estimates for ZS. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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. The Zacks Consensus EPS estimate remained stagnant within the past month. ZS currently has a Zacks Rank of #3 (Hold).

In terms of valuation, ZS is currently trading at a Forward P/E ratio of 304.86. This represents a premium compared to its industry's average Forward P/E of 28.68.

We can also see that ZS currently has a PEG ratio of 25.17. 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 2.22 as of yesterday's close.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 105, which puts it in the top 42% 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.

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