ZSCALER INC (ZS) Stock Fundamental Analysis
NASDAQ:ZS - Nasdaq - US98980G1022 - Common Stock - Currency: USD
ZS gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 282 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.
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 -0.73%, ZS is in the better half of the industry, outperforming 60.99% of the companies in the same industry.
ZS has a better Return On Equity (-2.15%) than 63.48% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -0.73% | ||
| ROE | -2.15% | ||
| 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 better Gross Margin (77.38%) than 74.82% of its industry peers.
In the last couple of years the Gross Margin of ZS has remained more or less at the same level.
ZS does not have Profit Margin and Operating Margin available, so we won't be analyzing them here.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | N/A | ||
| PM (TTM) | N/A | ||
| GM | 77.38% |
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.
The number of shares outstanding for ZS has been increased compared to 5 years ago.
Compared to 1 year ago, ZS has an improved debt to assets ratio.
2.2 Solvency
ZS has an Altman-Z score of 7.91. This indicates that ZS is financially healthy and has little risk of bankruptcy at the moment.
With an excellent Altman-Z score value of 7.91, ZS belongs to the best of the industry, outperforming 80.14% of the companies in the same industry.
ZS has a debt to FCF ratio of 1.66. This is a very positive value and a sign of high solvency as it would only need 1.66 years to pay back of all of its debts.
ZS has a Debt to FCF ratio of 1.66. This is in the better half of the industry: ZS outperforms 68.79% of its industry peers.
ZS has a Debt/Equity ratio of 0.64. This is a neutral value indicating ZS is somewhat dependend on debt financing.
ZS has a worse Debt to Equity ratio (0.64) than 68.44% 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 | 0.64 | ||
| Debt/FCF | 1.66 | ||
| Altman-Z | 7.91 |
ROIC/WACCN/A
WACC10.12%
2.3 Liquidity
A Current Ratio of 1.24 indicates that ZS should not have too much problems paying its short term obligations.
Looking at the Current ratio, with a value of 1.24, ZS is doing worse than 61.70% of the companies in the same industry.
ZS has a Quick Ratio of 1.24. 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 worse Quick ratio (1.24) than 61.35% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.24 | ||
| Quick Ratio | 1.24 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 10.85% over the past year.
ZS shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 70.72% yearly.
Looking at the last year, ZS shows a very strong growth in Revenue. The Revenue has grown by 25.46%.
Measured over the past years, ZS shows a very strong growth in Revenue. The Revenue has been growing by 48.24% on average per year.
EPS 1Y (TTM)10.85%
EPS 3Y81.9%
EPS 5Y70.72%
EPS Q2Q%-4.55%
Revenue 1Y (TTM)25.46%
Revenue growth 3Y47.68%
Revenue growth 5Y48.24%
Sales Q2Q%22.57%
3.2 Future
The Earnings Per Share is expected to grow by 17.65% on average over the next years. This is quite good.
Based on estimates for the next years, ZS will show a very strong growth in Revenue. The Revenue will grow by 21.26% on average per year.
EPS Next Y3.04%
EPS Next 2Y8.75%
EPS Next 3Y12.86%
EPS Next 5Y17.65%
Revenue Next Year24.11%
Revenue Next 2Y22.28%
Revenue Next 3Y21.46%
Revenue Next 5Y21.26%
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
ZS is valuated quite expensively with a Price/Earnings ratio of 85.22.
ZS's Price/Earnings is on the same level as the industry average.
The average S&P500 Price/Earnings ratio is at 26.99. ZS is valued rather expensively when compared to this.
With a Price/Forward Earnings ratio of 73.86, ZS can be considered very expensive at the moment.
The rest of the industry has a similar Price/Forward Earnings ratio as ZS.
The average S&P500 Price/Forward Earnings ratio is at 36.36. ZS is valued rather expensively when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 85.22 | ||
| Fwd PE | 73.86 |
4.2 Price Multiples
The rest of the industry has a similar Price/Free Cash Flow ratio as ZS.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 62.78 | ||
| EV/EBITDA | N/A |
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 12.86% in the coming years.
PEG (NY)28
PEG (5Y)1.21
EPS Next 2Y8.75%
EPS Next 3Y12.86%
5. Dividend
5.1 Amount
ZS does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
NASDAQ:ZS (8/7/2025, 9:56:05 AM)
278.66
-10.66 (-3.68%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners58.21%
Inst Owner Change0.17%
Ins Owners36.7%
Ins Owner Change1.25%
Market Cap43.39B
Analysts80
Price Target323.01 (15.92%)
Short Float %6.27%
Short Ratio2.51
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)8.9%
Min EPS beat(2)8.39%
Max EPS beat(2)9.41%
EPS beat(4)4
Avg EPS beat(4)14.72%
Min EPS beat(4)8.39%
Max EPS beat(4)22.98%
EPS beat(8)8
Avg EPS beat(8)22.02%
EPS beat(12)12
Avg EPS beat(12)19.58%
EPS beat(16)16
Avg EPS beat(16)23.01%
Revenue beat(2)0
Avg Revenue beat(2)-1.12%
Min Revenue beat(2)-1.21%
Max Revenue beat(2)-1.03%
Revenue beat(4)2
Avg Revenue beat(4)-0.08%
Min Revenue beat(4)-1.21%
Max Revenue beat(4)1.35%
Revenue beat(8)6
Avg Revenue beat(8)0.62%
Revenue beat(12)9
Avg Revenue beat(12)0.61%
Revenue beat(16)13
Avg Revenue beat(16)1.4%
PT rev (1m)1.96%
PT rev (3m)33.24%
EPS NQ rev (1m)0%
EPS NQ rev (3m)3.23%
EPS NY rev (1m)0%
EPS NY rev (3m)3.73%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-0.1%
Revenue NY rev (1m)-0.07%
Revenue NY rev (3m)0.37%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 85.22 | ||
| Fwd PE | 73.86 | ||
| P/S | 17.04 | ||
| P/FCF | 62.78 | ||
| P/OCF | 46.88 | ||
| P/B | 24.04 | ||
| P/tB | 32.48 | ||
| EV/EBITDA | N/A |
EPS(TTM)3.27
EY1.17%
EPS(NY)3.77
Fwd EY1.35%
FCF(TTM)4.44
FCFY1.59%
OCF(TTM)5.94
OCFY2.13%
SpS16.36
BVpS11.59
TBVpS8.58
PEG (NY)28
PEG (5Y)1.21
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -0.73% | ||
| ROE | -2.15% | ||
| ROCE | N/A | ||
| ROIC | N/A | ||
| ROICexc | N/A | ||
| ROICexgc | N/A | ||
| OM | N/A | ||
| PM (TTM) | N/A | ||
| GM | 77.38% | ||
| FCFM | 27.14% |
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-Score4
Asset Turnover0.48
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.64 | ||
| Debt/FCF | 1.66 | ||
| Debt/EBITDA | N/A | ||
| Cap/Depr | 210.64% | ||
| Cap/Sales | 9.2% | ||
| Interest Coverage | N/A | ||
| Cash Conversion | N/A | ||
| Profit Quality | N/A | ||
| Current Ratio | 1.24 | ||
| Quick Ratio | 1.24 | ||
| Altman-Z | 7.91 |
F-Score4
WACC10.12%
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)10.85%
EPS 3Y81.9%
EPS 5Y70.72%
EPS Q2Q%-4.55%
EPS Next Y3.04%
EPS Next 2Y8.75%
EPS Next 3Y12.86%
EPS Next 5Y17.65%
Revenue 1Y (TTM)25.46%
Revenue growth 3Y47.68%
Revenue growth 5Y48.24%
Sales Q2Q%22.57%
Revenue Next Year24.11%
Revenue Next 2Y22.28%
Revenue Next 3Y21.46%
Revenue Next 5Y21.26%
EBIT growth 1Y10.61%
EBIT growth 3YN/A
EBIT growth 5YN/A
EBIT Next Year66.45%
EBIT Next 3Y37.05%
EBIT Next 5YN/A
FCF growth 1Y125.05%
FCF growth 3Y59.67%
FCF growth 5Y83.91%
OCF growth 1Y115.44%
OCF growth 3Y56.87%
OCF growth 5Y68.16%