Zscaler (ZS) Gains But Lags Market: What You Should Know

Zscaler (ZS) closed the most recent trading day at $153.96, moving +0.12% from the previous trading session. This change lagged the S&P 500's 2.46% gain on the day. At the same time, the Dow added 2.59%, and the tech-heavy Nasdaq lost 0.2%.

Coming into today, shares of the cloud-based information security provider had lost 7.31% in the past month. In that same time, the Computer and Technology sector lost 1.56%, while the S&P 500 gained 4.56%.

Investors will be hoping for strength from Zscaler as it approaches its next earnings release. In that report, analysts expect Zscaler to post earnings of $0.26 per share. This would mark year-over-year growth of 85.71%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $341.13 million, up 47.98% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $1.18 per share and revenue of $1.5 billion. These totals would mark changes of +71.01% and +37.47%, respectively, from last year.

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

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.

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 has moved 2.87% higher. Zscaler currently has a Zacks Rank of #1 (Strong Buy).

In terms of valuation, Zscaler is currently trading at a Forward P/E ratio of 130.72. Its industry sports an average Forward P/E of 20.13, so we one might conclude that Zscaler is trading at a premium comparatively.

It is also worth noting that ZS currently has a PEG ratio of 2.9. 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 1.73 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 73, which puts it in the top 29% of all 250+ industries.

The Zacks Industry Rank includes is listed in order 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.

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

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