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

In the latest trading session, Zscaler (ZS) closed at $150.29, marking a -1.83% move from the previous day. This change lagged the S&P 500's daily gain of 0.25%. Elsewhere, the Dow lost 0.26%, while the tech-heavy Nasdaq lost 0.54%.

Coming into today, shares of the cloud-based information security provider had lost 31.75% in the past month. In that same time, the Computer and Technology sector lost 13.61%, while the S&P 500 lost 11.03%.

Zscaler will be looking to display strength as it nears its next earnings release, which is expected to be May 26, 2022. On that day, Zscaler is projected to report earnings of $0.11 per share, which would represent a year-over-year decline of 26.67%. Meanwhile, our latest consensus estimate is calling for revenue of $271.81 million, up 54.09% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.55 per share and revenue of $1.05 billion, which would represent changes of +5.77% and +55.89%, respectively, from the prior year.

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Any recent changes to analyst estimates for Zscaler should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.05% higher. Zscaler is currently a Zacks Rank #3 (Hold).

Looking at its valuation, Zscaler is holding a Forward P/E ratio of 277.78. This represents a premium compared to its industry's average Forward P/E of 19.51.

It is also worth noting that ZS currently has a PEG ratio of 7.1. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Internet - Services was holding an average PEG ratio of 1.97 at yesterday's closing price.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 154, which puts it in the bottom 39% 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.

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


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