ZS gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 277 industry peers in the Software industry. While ZS seems to be doing ok healthwise, there are quite some concerns on its profitability. ZS is valued quite expensively, but it does show have an excellent growth rating.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

In the past year ZS was profitable.
In the past year ZS had a positive cash flow from operations.
ZS had negative earnings in each of the past 5 years.
Each year in the past 5 years ZS had a positive operating cash flow.

1.2 Ratios

The Return On Assets of ZS (-0.63%) is comparable to the rest of the industry.
ZS has a Return On Equity (-2.07%) which is in line with its industry peers.

		Industry Rank	Sector Rank
ROA	-0.63%
ROE	-2.07%
ROIC	N/A

ROA(3y)-2.49%

ROA(5y)-6.57%

ROE(3y)-11.58%

ROE(5y)-30.47%

ROIC(3y)N/A

ROIC(5y)N/A

1.3 Margins

ZS's Gross Margin of 76.65% is fine compared to the rest of the industry. ZS outperforms 70.76% of its industry peers.
ZS's Gross Margin has been stable in the last couple of years.
The Profit Margin and Operating Margin are not available for ZS so they could not be analyzed.

		Industry Rank	Sector Rank
OM	N/A
PM (TTM)	N/A
GM	76.65%

OM growth 3YN/A

OM growth 5YN/A

PM growth 3YN/A

PM growth 5YN/A

GM growth 3Y-0.4%

GM growth 5Y-0.23%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

ZS does not have a ROIC to compare to the WACC, probably because it is not profitable.
Compared to 1 year ago, ZS has more shares outstanding
Compared to 5 years ago, ZS has more shares outstanding
Compared to 1 year ago, ZS has a worse debt to assets ratio.

2.2 Solvency

An Altman-Z score of 4.88 indicates that ZS is not in any danger for bankruptcy at the moment.
ZS's Altman-Z score of 4.88 is fine compared to the rest of the industry. ZS outperforms 72.56% of its industry peers.
The Debt to FCF ratio of ZS is 2.00, which is a good value as it means it would take ZS, 2.00 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of ZS (2.00) is better than 67.87% of its industry peers.
ZS has a Debt/Equity ratio of 0.86. This is a neutral value indicating ZS is somewhat dependend on debt financing.
The Debt to Equity ratio of ZS (0.86) is worse than 73.29% of its industry peers.
Even though the debt/equity ratio score it not favorable for ZS, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.

		Industry Rank	Sector Rank
Debt/Equity	0.86
Debt/FCF	2
Altman-Z	4.88

ROIC/WACCN/A

WACC10.88%

2.3 Liquidity

A Current Ratio of 1.82 indicates that ZS should not have too much problems paying its short term obligations.
Looking at the Current ratio, with a value of 1.82, ZS is in line with its industry, outperforming 54.51% of the companies in the same industry.
ZS has a Quick Ratio of 1.82. This is a normal value and indicates that ZS is financially healthy and should not expect problems in meeting its short term obligations.
ZS's Quick ratio of 1.82 is in line compared to the rest of the industry. ZS outperforms 54.87% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	1.82
Quick Ratio	1.82

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WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

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3. Growth

3.1 Past

The Earnings Per Share has been growing slightly by 5.47% over the past year.
The Earnings Per Share has been growing by 68.71% on average over the past years. This is a very strong growth
Looking at the last year, ZS shows a very strong growth in Revenue. The Revenue has grown by 23.24%.
The Revenue has been growing by 44.03% on average over the past years. This is a very strong growth!

EPS 1Y (TTM)5.47%

EPS 3Y68.14%

EPS 5Y68.71%

EPS Q2Q%24.68%

Revenue 1Y (TTM)23.24%

Revenue growth 3Y34.82%

Revenue growth 5Y44.03%

Sales Q2Q%25.5%

3.2 Future

Based on estimates for the next years, ZS will show a quite strong growth in Earnings Per Share. The EPS will grow by 19.81% on average per year.
ZS is expected to show a strong growth in Revenue. In the coming years, the Revenue will grow by 20.01% yearly.

EPS Next Y19.74%

EPS Next 2Y18.63%

EPS Next 3Y19.33%

EPS Next 5Y19.81%

Revenue Next Year23.95%

Revenue Next 2Y21.61%

Revenue Next 3Y20.67%

Revenue Next 5Y20.01%

3.3 Evolution

The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
The estimated forward Revenue growth is still strong, although it is decreasing when compared to the stronger growth in the past years.

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4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 60.03, which means the current valuation is very expensive for ZS.
ZS's Price/Earnings is on the same level as the industry average.
When comparing the Price/Earnings ratio of ZS to the average of the S&P500 Index (27.32), we can say ZS is valued expensively.
The Price/Forward Earnings ratio is 45.13, which means the current valuation is very expensive for ZS.
The rest of the industry has a similar Price/Forward Earnings ratio as ZS.
ZS is valuated expensively when we compare the Price/Forward Earnings ratio to 24.32, which is the current average of the S&P500 Index.

		Industry Rank	Sector Rank
PE	60.03
Fwd PE	45.13

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ZS is on the same level as its industry peers.
61.73% of the companies in the same industry are more expensive than ZS, based on the Price/Free Cash Flow ratio.

		Industry Rank	Sector Rank
P/FCF	39.17
EV/EBITDA	3339.77

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
ZS's earnings are expected to grow with 19.33% in the coming years. This may justify a more expensive valuation.