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

In the latest trading session, Zscaler (ZS) closed at $178.71, marking a -0.94% move from the previous day. This change lagged the S&P 500's 0.07% loss on the day. Meanwhile, the Dow gained 0.08%, and the Nasdaq, a tech-heavy index, lost 0.04%.

Heading into today, shares of the cloud-based information security provider had gained 21.12% over the past month, outpacing the Computer and Technology sector's gain of 8.42% and the S&P 500's gain of 8.06% in that time.

Zscaler will be looking to display strength as it nears its next earnings release, which is expected to be September 8, 2022. The company is expected to report EPS of $0.20, up 42.86% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $305.64 million, up 55.09% from the year-ago period.

It is also important to note the recent changes to analyst estimates for Zscaler. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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.

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. Over the past month, the Zacks Consensus EPS estimate has moved 0.28% lower. Zscaler is holding a Zacks Rank of #3 (Hold) right now.

Valuation is also important, so investors should note that Zscaler has a Forward P/E ratio of 175.15 right now. Its industry sports an average Forward P/E of 21.94, so we one might conclude that Zscaler is trading at a premium comparatively.

Investors should also note that ZS has a PEG ratio of 3.68 right now. 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. ZS's industry had an average PEG ratio of 2.51 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 100, which puts it in the top 40% 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.

To follow ZS in the coming trading sessions, be sure to utilize Zacks.com.


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