Zscaler (ZS) Increases Yet Falls Behind Market: What Investors Need to Know

Core Viewpoint - Zscaler is expected to report strong financial results, with anticipated earnings growth and revenue increase, despite recent stock performance lagging behind broader market indices [2][3]. Financial Performance - Analysts expect Zscaler to post earnings of $0.89 per share, marking a year-over-year growth of 14.1% [2]. - The consensus estimate for revenue is $798 million, reflecting a 23.17% increase from the prior-year quarter [2]. - Full-year estimates project earnings of $3.8 per share and revenue of $3.29 billion, representing year-over-year changes of +15.85% and +23.14%, respectively [3]. Analyst Sentiment - Recent changes in analyst estimates for Zscaler indicate a positive outlook for the business [3]. - Over the last 30 days, the Zacks Consensus EPS estimate has increased by 16.67% [5]. Valuation Metrics - Zscaler has a Forward P/E ratio of 54.34, which is higher than the industry average of 51.12, suggesting it is trading at a premium [6]. - The PEG ratio for Zscaler is 2.98, compared to the industry average of 2.66, indicating a higher valuation relative to expected earnings growth [6]. Industry Context - The Security industry, part of the Computer and Technology sector, has a Zacks Industry Rank of 100, placing it in the top 41% of over 250 industries [7]. - Historically, the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7].