ZS gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 278 industry peers in the Software industry. The financial health of ZS is average, but there are quite some concerns on its profitability. ZS is valued quite expensive, but it does show an excellent growth.

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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.
ZS had negative earnings in each of the past 5 years.
ZS had a positive operating cash flow in each of the past 5 years.

1.2 Ratios

ZS has a Return On Assets (-0.63%) which is comparable to the rest of the industry.
With a Return On Equity value of -2.07%, ZS perfoms like the industry average, outperforming 56.12% of the companies in the same 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

The Gross Margin of ZS (76.65%) is better than 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
ZS has more shares outstanding than it did 5 years ago.
The debt/assets ratio for ZS is higher compared to a year ago.

2.2 Solvency

An Altman-Z score of 5.00 indicates that ZS is not in any danger for bankruptcy at the moment.
ZS has a Altman-Z score of 5.00. This is in the better half of the industry: ZS outperforms 73.02% 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.
ZS's Debt to FCF ratio of 2.00 is fine compared to the rest of the industry. ZS outperforms 67.63% of its industry peers.
A Debt/Equity ratio of 0.86 indicates that ZS is somewhat dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.86, ZS is doing worse than 73.38% of the companies in the same industry.
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	5

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.
The Current ratio of ZS (1.82) is comparable to the rest of the industry.
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 in line with its industry peers.

		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

ZS shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 5.47%.
ZS shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 68.71% yearly.
The Revenue has grown by 23.24% in the past year. This is a very strong growth!
Measured over the past years, ZS shows a very strong growth in Revenue. The Revenue has been growing by 44.03% on average per year.

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

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

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

Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of 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

ZS is valuated quite expensively with a Price/Earnings ratio of 61.83.
Compared to the rest of the industry, the Price/Earnings ratio of ZS is on the same level as its industry peers.
ZS's Price/Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 27.25.
Based on the Price/Forward Earnings ratio of 46.48, the valuation of ZS can be described as expensive.
The rest of the industry has a similar Price/Forward Earnings ratio as ZS.
ZS's Price/Forward Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 25.98.

		Industry Rank	Sector Rank
PE	61.83
Fwd PE	46.48

4.2 Price Multiples

ZS's Enterprise Value to EBITDA ratio is in line with the industry average.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of ZS indicates a somewhat cheap valuation: ZS is cheaper than 62.23% of the companies listed in the same industry.

		Industry Rank	Sector Rank
P/FCF	40.34
EV/EBITDA	3445.5

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates ZS does not grow enough to justify the current Price/Earnings ratio.
A more expensive valuation may be justified as ZS's earnings are expected to grow with 19.33% in the coming years.