We assign a fundamental rating of 4 out of 10 to ZS. ZS was compared to 278 industry peers in the Software industry. The financial health of ZS is average, but there are quite some concerns on its profitability. ZS shows excellent growth, but is valued quite expensive already.

Quickly go to:

1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

ZS had positive earnings in the past year.
In the past year ZS had a positive cash flow from operations.
In the past 5 years ZS always reported negative net income.
ZS had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

Looking at the Return On Assets, with a value of -0.63%, ZS is in line with its industry, outperforming 53.96% of the companies in the same industry.
ZS has a Return On Equity (-2.07%) which is comparable to the rest of the industry.

		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 70.86% of its industry peers.
In the last couple of years the Gross Margin of ZS has remained more or less at the same level.
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
The debt/assets ratio for ZS is higher compared to a year ago.

2.2 Solvency

An Altman-Z score of 4.90 indicates that ZS is not in any danger for bankruptcy at the moment.
ZS has a better Altman-Z score (4.90) than 72.30% 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.
Looking at the Debt to FCF ratio, with a value of 2.00, ZS is in the better half of the industry, outperforming 67.99% of the companies in the same industry.
A Debt/Equity ratio of 0.86 indicates that ZS is somewhat dependend on debt financing.
ZS has a worse Debt to Equity ratio (0.86) than 73.38% 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	4.9

ROIC/WACCN/A

WACC10.87%

2.3 Liquidity

ZS has a Current 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 has a Current ratio (1.82) which is in line with its industry peers.
A Quick Ratio of 1.82 indicates that ZS should not have too much problems paying its short term obligations.
ZS has a Quick ratio (1.82) which is comparable to the rest of the industry.

		Industry Rank	Sector Rank
Current Ratio	1.82
Quick Ratio	1.82

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WACC

Debt/Equity

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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%.
ZS shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 44.03% yearly.

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.
Although the future Revenue growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.

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4. Valuation

4.1 Price/Earnings Ratio

With a Price/Earnings ratio of 60.41, ZS can be considered very expensive at the moment.
ZS's Price/Earnings ratio is in line with the industry average.
ZS's Price/Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 27.21.
A Price/Forward Earnings ratio of 45.41 indicates a quite expensive valuation of ZS.
Compared to the rest of the industry, the Price/Forward Earnings ratio of ZS is on the same level as its industry peers.
The average S&P500 Price/Forward Earnings ratio is at 25.98. ZS is valued rather expensively when compared to this.

		Industry Rank	Sector Rank
PE	60.41
Fwd PE	45.41

4.2 Price Multiples

ZS's Enterprise Value to EBITDA is on the same level as the industry average.
Based on the Price/Free Cash Flow ratio, ZS is valued a bit cheaper than the industry average as 62.23% of the companies are valued more expensively.

		Industry Rank	Sector Rank
P/FCF	39.41
EV/EBITDA	3357

4.3 Compensation for Growth

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