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

Zscaler (ZS) closed at $141.78 in the latest trading session, marking a +1.21% move from the prior day. The stock lagged the S&P 500's daily gain of 2.02%. At the same time, the Dow added 1.34%, and the tech-heavy Nasdaq gained 0.27%.

Prior to today's trading, shares of the cloud-based information security provider had lost 37.34% over the past month. This has lagged the Computer and Technology sector's loss of 10.33% and the S&P 500's loss of 8.64% in that time.

Zscaler will be looking to display strength as it nears its next earnings release, which is expected to be May 26, 2022. In that report, analysts expect Zscaler to post earnings of $0.11 per share. This would mark a year-over-year decline of 26.67%. Our most recent consensus estimate is calling for quarterly revenue of $271.81 million, up 54.09% from the year-ago period.

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.

Any recent changes to analyst estimates for Zscaler should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.05% higher within the past month. Zscaler is holding a Zacks Rank of #3 (Hold) right now.

Investors should also note Zscaler's current valuation metrics, including its Forward P/E ratio of 254.18. Its industry sports an average Forward P/E of 19.76, 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 6.5. 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 2.23 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 165, which puts it in the bottom 35% 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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