ZSCALER INC (ZS)
US98980G1022 - Common Stock
We assign a fundamental rating of 5 out of 10 to ZS. ZS was compared to 276 industry peers in the Software industry. ZS scores quite bad on profitability, while its financial health is fine. Not spectacular, but in line with the averages. 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.
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
Looking at the Return On Assets, with a value of -3.52%, ZS is in the better half of the industry, outperforming 60.22% of the companies in the same industry.
ZS has a Return On Equity (-14.46%) which is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -3.52% | ||
| ROE | -14.46% | ||
| ROIC | N/A |
ROA(3y)-10.33%
ROA(5y)-8.4%
ROE(3y)-48.51%
ROE(5y)-35.71%
ROIC(3y)N/A
ROIC(5y)N/A
1.3 Margins
ZS has a Gross Margin of 77.47%. This is in the better half of the industry: ZS outperforms 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 | 77.47% |
OM growth 3YN/A
OM growth 5YN/A
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y-0.1%
GM growth 5Y-0.64%
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
The number of shares outstanding for ZS has been increased compared to 5 years ago.
ZS has a better debt/assets ratio than last year.
2.2 Solvency
An Altman-Z score of 5.74 indicates that ZS is not in any danger for bankruptcy at the moment.
ZS has a better Altman-Z score (5.74) than 74.09% of its industry peers.
ZS has a debt to FCF ratio of 2.28. This is a good value and a sign of high solvency as ZS would need 2.28 years to pay back of all of its debts.
ZS's Debt to FCF ratio of 2.28 is fine compared to the rest of the industry. ZS outperforms 68.61% of its industry peers.
A Debt/Equity ratio of 1.19 is on the high side and indicates that ZS has dependencies on debt financing.
ZS has a worse Debt to Equity ratio (1.19) than 75.18% of its industry peers.
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 | 1.19 | ||
| Debt/FCF | 2.28 | ||
| Altman-Z | 5.74 |
ROIC/WACCN/A
WACC9.73%
2.3 Liquidity
ZS has a Current Ratio of 1.98. 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 Current ratio, with a value of 1.98, ZS is in line with its industry, outperforming 59.12% of the companies in the same industry.
A Quick Ratio of 1.98 indicates that ZS should not have too much problems paying its short term obligations.
The Quick ratio of ZS (1.98) is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.98 | ||
| Quick Ratio | 1.98 |
3. Growth
3.1 Past
ZS shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 136.11%, which is quite impressive.
The Earnings Per Share has been growing by 95.02% on average over the past years. This is a very strong growth
The Revenue has grown by 40.62% in the past year. This is a very strong growth!
The Revenue has been growing by 53.43% on average over the past years. This is a very strong growth!
EPS 1Y (TTM)136.11%
EPS 3Y95.02%
EPS 5YN/A
EPS growth Q2Q105.41%
Revenue 1Y (TTM)40.62%
Revenue growth 3Y55.35%
Revenue growth 5Y53.43%
Revenue growth Q2Q35.45%
3.2 Future
Based on estimates for the next years, ZS will show a very strong growth in Earnings Per Share. The EPS will grow by 31.90% on average per year.
Based on estimates for the next years, ZS will show a very strong growth in Revenue. The Revenue will grow by 26.90% on average per year.
EPS Next Y59.89%
EPS Next 2Y37.77%
EPS Next 3Y33.64%
EPS Next 5Y31.9%
Revenue Next Year33.27%
Revenue Next 2Y29.38%
Revenue Next 3Y27.64%
Revenue Next 5Y26.9%
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.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 69.38 indicates a quite expensive valuation of ZS.
ZS's Price/Earnings ratio is in line with the industry average.
When comparing the Price/Earnings ratio of ZS to the average of the S&P500 Index (25.20), we can say ZS is valued expensively.
Based on the Price/Forward Earnings ratio of 52.37, the valuation of ZS can be described as expensive.
ZS's Price/Forward Earnings ratio is in line with the industry average.
ZS's Price/Forward Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 21.60.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 69.38 | ||
| Fwd PE | 52.37 |
4.2 Price Multiples
Based on the Price/Free Cash Flow ratio, ZS is valued a bit cheaper than the industry average as 60.58% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 52.95 | ||
| EV/EBITDA | N/A |
4.3 Compensation for Growth
ZS's PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
ZS's earnings are expected to grow with 33.64% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.16
PEG (5Y)N/A
EPS Next 2Y37.77%
EPS Next 3Y33.64%
5. Dividend
5.1 Amount
No dividends for ZS!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
ZSCALER INC
NASDAQ:ZS (4/23/2024, 7:00:03 PM)
Premarket: 178.2 +1.28 (+0.72%)176.92
+5.95 (+3.48%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
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Inst Owners
Inst Owner Change
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Market Cap26.51B
Analysts
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Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
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Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 69.38 | ||
| Fwd PE | 52.37 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)1.16
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -3.52% | ||
| ROE | -14.46% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | N/A | ||
| PM (TTM) | N/A | ||
| GM | 77.47% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover0.48
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.19 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 1.98 | ||
| Quick Ratio | 1.98 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
Growth
EPS 1Y (TTM)136.11%
EPS 3Y95.02%
EPS 5Y
EPS growth Q2Q
EPS Next Y59.89%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)40.62%
Revenue growth 3Y55.35%
Revenue growth 5Y
Revenue growth Q2Q
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
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EBIT growth 3Y
EBIT growth 5Y
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