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Zscaler (ZS) Dips More Than Broader Markets: What You Should Know

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Zscaler (ZS - Free Report) closed the most recent trading day at $48.40, moving -0.62% from the previous trading session. This change lagged the S&P 500's daily loss of 0.28%. At the same time, the Dow lost 0.42%, and the tech-heavy Nasdaq lost 0.03%.

Prior to today's trading, shares of the cloud-based information security provider had gained 2.96% over the past month. This has lagged the Computer and Technology sector's gain of 5.05% and the S&P 500's gain of 3.31% in that time.

Wall Street will be looking for positivity from ZS as it approaches its next earnings report date. The company is expected to report EPS of $0.03, down 66.67% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $98.90 million, up 33.11% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $0.15 per share and revenue of $409.84 million. These totals would mark changes of -31.82% and +35.33%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for ZS. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate remained stagnant. ZS is currently a Zacks Rank #4 (Sell).

Valuation is also important, so investors should note that ZS has a Forward P/E ratio of 334.22 right now. Its industry sports an average Forward P/E of 29.63, so we one might conclude that ZS is trading at a premium comparatively.

It is also worth noting that ZS currently has a PEG ratio of 9.15. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ZS's industry had an average PEG ratio of 2.68 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 190, putting it in the bottom 26% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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