ZSCALER INC (ZS) Stock Fundamental Analysis
NASDAQ:ZS - Nasdaq - US98980G1022 - Common Stock - Currency: USD
Overall ZS gets a fundamental rating of 5 out of 10. We evaluated ZS against 286 industry peers in the Software industry. While ZS seems to be doing ok healthwise, there are quite some concerns on its profitability. ZS shows excellent growth, but is valued quite expensive already.
1. Profitability
1.1 Basic Checks
In the past year ZS was profitable.
ZS had a positive operating cash flow in the past year.
ZS had negative earnings in each of the past 5 years.
In the past 5 years ZS always reported a positive cash flow from operatings.
1.2 Ratios
ZS has a Return On Assets of -0.77%. This is comparable to the rest of the industry: ZS outperforms 58.78% of its industry peers.
ZS has a Return On Equity of -2.54%. This is comparable to the rest of the industry: ZS outperforms 59.14% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -0.77% | ||
| ROE | -2.54% | ||
| ROIC | N/A |
ROA(3y)-6.87%
ROA(5y)-7.7%
ROE(3y)-33.5%
ROE(5y)-34.76%
ROIC(3y)N/A
ROIC(5y)N/A
1.3 Margins
ZS has a Gross Margin of 77.94%. This is in the better half of the industry: ZS outperforms 74.19% 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 | 77.94% |
OM growth 3YN/A
OM growth 5YN/A
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y0.14%
GM growth 5Y-0.59%
2. Health
2.1 Basic Checks
ZS does not have a ROIC to compare to the WACC, probably because it is not profitable.
The number of shares outstanding for ZS has been increased compared to 1 year ago.
ZS has more shares outstanding than it did 5 years ago.
ZS has a better debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 5.92 indicates that ZS is not in any danger for bankruptcy at the moment.
ZS has a Altman-Z score of 5.92. This is in the better half of the industry: ZS outperforms 66.31% of its industry peers.
The Debt to FCF ratio of ZS is 1.76, which is an excellent value as it means it would take ZS, only 1.76 years of fcf income to pay off all of its debts.
ZS has a Debt to FCF ratio of 1.76. This is in the better half of the industry: ZS outperforms 68.10% of its industry peers.
ZS has a Debt/Equity ratio of 0.80. This is a neutral value indicating ZS is somewhat dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.80, ZS is doing worse than 73.12% of the companies in the same industry.
Although ZS does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.8 | ||
| Debt/FCF | 1.76 | ||
| Altman-Z | 5.92 |
ROIC/WACCN/A
WACC10.81%
2.3 Liquidity
ZS has a Current Ratio of 1.15. 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 Current ratio of 1.15 is on the low side compared to the rest of the industry. ZS is outperformed by 68.46% of its industry peers.
ZS has a Quick Ratio of 1.15. This is a normal value and indicates that ZS is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 1.15, ZS is doing worse than 68.10% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.15 | ||
| Quick Ratio | 1.15 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 52.31% over the past year.
The Earnings Per Share has been growing by 70.72% on average over the past years. This is a very strong growth
ZS shows a strong growth in Revenue. In the last year, the Revenue has grown by 30.77%.
The Revenue has been growing by 48.24% on average over the past years. This is a very strong growth!
EPS 1Y (TTM)52.31%
EPS 3Y81.9%
EPS 5Y70.72%
EPS Q2Q%14.93%
Revenue 1Y (TTM)30.77%
Revenue growth 3Y47.68%
Revenue growth 5Y48.24%
Sales Q2Q%26.43%
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 19.16% on average per year.
ZS is expected to show a strong growth in Revenue. In the coming years, the Revenue will grow by 21.50% yearly.
EPS Next Y-2.8%
EPS Next 2Y7.96%
EPS Next 3Y12.01%
EPS Next 5Y19.16%
Revenue Next Year23.15%
Revenue Next 2Y21.89%
Revenue Next 3Y21.64%
Revenue Next 5Y21.5%
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.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 61.29, ZS can be considered very expensive at the moment.
Compared to the rest of the industry, the Price/Earnings ratio of ZS is on the same level as its industry peers.
The average S&P500 Price/Earnings ratio is at 28.28. ZS is valued rather expensively when compared to this.
The Price/Forward Earnings ratio is 54.23, which means the current valuation is very expensive for ZS.
The rest of the industry has a similar Price/Forward Earnings ratio as ZS.
When comparing the Price/Forward Earnings ratio of ZS to the average of the S&P500 Index (91.29), we can say ZS is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 61.29 | ||
| Fwd PE | 54.23 |
4.2 Price Multiples
65.23% 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 | 47.44 | ||
| EV/EBITDA | N/A |
4.3 Compensation for Growth
A more expensive valuation may be justified as ZS's earnings are expected to grow with 12.01% in the coming years.
PEG (NY)N/A
PEG (5Y)0.87
EPS Next 2Y7.96%
EPS Next 3Y12.01%
5. Dividend
5.1 Amount
No dividends for ZS!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
ZSCALER INC
NASDAQ:ZS (1/29/2025, 8:00:02 PM)
After market: 198 -3.63 (-1.8%)201.63
-3.05 (-1.49%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners50.14%
Inst Owner Change-0.46%
Ins Owners37.48%
Ins Owner Change1.58%
Market Cap30.94B
Analysts78.11
Price Target232.19 (15.16%)
Short Float %4.79%
Short Ratio2.47
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
Yearly DividendN/A
Dividend Growth(5Y)N/A
DPN/A
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)20.54%
Min EPS beat(2)18.11%
Max EPS beat(2)22.98%
EPS beat(4)4
Avg EPS beat(4)24.68%
Min EPS beat(4)18.11%
Max EPS beat(4)30.36%
EPS beat(8)8
Avg EPS beat(8)23.83%
EPS beat(12)12
Avg EPS beat(12)23.9%
EPS beat(16)16
Avg EPS beat(16)29.98%
Revenue beat(2)2
Avg Revenue beat(2)0.96%
Min Revenue beat(2)0.57%
Max Revenue beat(2)1.35%
Revenue beat(4)4
Avg Revenue beat(4)0.66%
Min Revenue beat(4)0.22%
Max Revenue beat(4)1.35%
Revenue beat(8)7
Avg Revenue beat(8)1.02%
Revenue beat(12)11
Avg Revenue beat(12)1.24%
Revenue beat(16)15
Avg Revenue beat(16)2.05%
PT rev (1m)2.22%
PT rev (3m)3.77%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-12.31%
EPS NY rev (1m)0%
EPS NY rev (3m)1.46%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-0.88%
Revenue NY rev (1m)0.04%
Revenue NY rev (3m)0.93%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 61.29 | ||
| Fwd PE | 54.23 | ||
| P/S | 13.46 | ||
| P/FCF | 47.44 | ||
| P/OCF | 36.38 | ||
| P/B | 21.66 | ||
| P/tB | 32.5 | ||
| EV/EBITDA | N/A |
EPS(TTM)3.29
EY1.63%
EPS(NY)3.72
Fwd EY1.84%
FCF(TTM)4.25
FCFY2.11%
OCF(TTM)5.54
OCFY2.75%
SpS14.98
BVpS9.31
TBVpS6.2
PEG (NY)N/A
PEG (5Y)0.87
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -0.77% | ||
| ROE | -2.54% | ||
| ROCE | N/A | ||
| ROIC | N/A | ||
| ROICexc | N/A | ||
| ROICexgc | N/A | ||
| OM | N/A | ||
| PM (TTM) | N/A | ||
| GM | 77.94% | ||
| FCFM | 28.36% |
ROA(3y)-6.87%
ROA(5y)-7.7%
ROE(3y)-33.5%
ROE(5y)-34.76%
ROIC(3y)N/A
ROIC(5y)N/A
ROICexc(3y)N/A
ROICexc(5y)N/A
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)N/A
ROCE(5y)N/A
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3YN/A
ROICexc growth 5YN/A
OM growth 3YN/A
OM growth 5YN/A
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y0.14%
GM growth 5Y-0.59%
F-Score6
Asset Turnover0.49
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.8 | ||
| Debt/FCF | 1.76 | ||
| Debt/EBITDA | N/A | ||
| Cap/Depr | 221.28% | ||
| Cap/Sales | 8.62% | ||
| Interest Coverage | N/A | ||
| Cash Conversion | N/A | ||
| Profit Quality | N/A | ||
| Current Ratio | 1.15 | ||
| Quick Ratio | 1.15 | ||
| Altman-Z | 5.92 |
F-Score6
WACC10.81%
ROIC/WACCN/A
Cap/Depr(3y)205.41%
Cap/Depr(5y)204.29%
Cap/Sales(3y)8.42%
Cap/Sales(5y)9.19%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)52.31%
EPS 3Y81.9%
EPS 5Y70.72%
EPS Q2Q%14.93%
EPS Next Y-2.8%
EPS Next 2Y7.96%
EPS Next 3Y12.01%
EPS Next 5Y19.16%
Revenue 1Y (TTM)30.77%
Revenue growth 3Y47.68%
Revenue growth 5Y48.24%
Sales Q2Q%26.43%
Revenue Next Year23.15%
Revenue Next 2Y21.89%
Revenue Next 3Y21.64%
Revenue Next 5Y21.5%
EBIT growth 1Y47.99%
EBIT growth 3YN/A
EBIT growth 5YN/A
EBIT Next Year61.61%
EBIT Next 3Y36.14%
EBIT Next 5YN/A
FCF growth 1Y167.72%
FCF growth 3Y59.67%
FCF growth 5Y83.91%
OCF growth 1Y138.14%
OCF growth 3Y56.87%
OCF growth 5Y68.16%