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

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In the latest trading session, Zscaler (ZS) closed at $231.06, marking a +0.85% move from the previous day. This move outpaced the S&P 500's daily gain of 0.82%.

Coming into today, shares of the cloud-based information security provider had gained 4.33% in the past month. In that same time, the Computer and Technology sector gained 1.27%, while the S&P 500 gained 3.89%.

Investors will be hoping for strength from ZS as it approaches its next earnings release. The company is expected to report EPS of $0.09, up 80% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $187.84 million, up 49.21% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $0.47 per share and revenue of $660.86 million, which would represent changes of +95.83% and +53.24%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for ZS. These revisions typically reflect the latest short-term business trends, which can change frequently. 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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. The Zacks Consensus EPS estimate has moved 0.05% higher within the past month. ZS is holding a Zacks Rank of #3 (Hold) right now.

Digging into valuation, ZS currently has a Forward P/E ratio of 482.9. Its industry sports an average Forward P/E of 30.47, so we one might conclude that ZS is trading at a premium comparatively.

Investors should also note that ZS has a PEG ratio of 9.54 right now. 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. Internet - Services stocks are, on average, holding a PEG ratio of 2.59 based on yesterday's closing prices.

The Internet - Services industry is part of the Computer and Technology sector. This industry currently has a Zacks Industry Rank of 197, which puts it in the bottom 23% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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