ZSCALER INC (ZS) Stock Fundamental Analysis
NASDAQ:ZS - Nasdaq - US98980G1022 - Common Stock - Currency: USD
We assign a fundamental rating of 4 out of 10 to ZS. ZS was compared to 283 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.
1. Profitability
1.1 Basic Checks
In the past year ZS was profitable.
ZS had a positive operating cash flow in the past year.
In the past 5 years ZS always reported negative net income.
Each year in the past 5 years ZS had a positive operating cash flow.
1.2 Ratios
Looking at the Return On Assets, with a value of -0.31%, ZS is in the better half of the industry, outperforming 63.25% of the companies in the same industry.
ZS has a Return On Equity of -0.97%. This is in the better half of the industry: ZS outperforms 63.96% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -0.31% | ||
| ROE | -0.97% | ||
| 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 77.77%. This is in the better half of the industry: ZS outperforms 74.91% 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 | 77.77% |
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.
Compared to 1 year ago, ZS has more shares outstanding
ZS has more shares outstanding than it did 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 7.14. This indicates that ZS is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 7.14, ZS is in the better half of the industry, outperforming 75.97% of the companies in the same industry.
ZS has a debt to FCF ratio of 1.65. This is a very positive value and a sign of high solvency as it would only need 1.65 years to pay back of all of its debts.
With a decent Debt to FCF ratio value of 1.65, ZS is doing good in the industry, outperforming 68.90% of the companies in the same industry.
ZS has a Debt/Equity ratio of 0.71. This is a neutral value indicating ZS is somewhat dependend on debt financing.
The Debt to Equity ratio of ZS (0.71) is worse than 69.96% 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 | 0.71 | ||
| Debt/FCF | 1.65 | ||
| Altman-Z | 7.14 |
ROIC/WACCN/A
WACC10.92%
2.3 Liquidity
A Current Ratio of 1.20 indicates that ZS should not have too much problems paying its short term obligations.
With a Current ratio value of 1.20, ZS is not doing good in the industry: 62.54% of the companies in the same industry are doing better.
ZS has a Quick Ratio of 1.20. 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 (1.20) than 62.54% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.2 | ||
| Quick Ratio | 1.2 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 29.80% 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
The Revenue has grown by 27.77% in the past year. This is a very strong growth!
ZS shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 48.24% yearly.
EPS 1Y (TTM)29.8%
EPS 3Y81.9%
EPS 5Y70.72%
EPS Q2Q%2.63%
Revenue 1Y (TTM)27.77%
Revenue growth 3Y47.68%
Revenue growth 5Y48.24%
Sales Q2Q%23.41%
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 15.50% yearly.
ZS is expected to show a strong growth in Revenue. In the coming years, the Revenue will grow by 21.34% yearly.
EPS Next Y-0.94%
EPS Next 2Y7.82%
EPS Next 3Y11.92%
EPS Next 5Y15.5%
Revenue Next Year23.65%
Revenue Next 2Y22.08%
Revenue Next 3Y21.49%
Revenue Next 5Y21.34%
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 76.77, ZS can be considered very expensive at the moment.
The rest of the industry has a similar Price/Earnings ratio as ZS.
ZS is valuated expensively when we compare the Price/Earnings ratio to 25.82, which is the current average of the S&P500 Index.
ZS is valuated quite expensively with a Price/Forward Earnings ratio of 68.51.
ZS's Price/Forward Earnings is on the same level as the industry average.
ZS is valuated expensively when we compare the Price/Forward Earnings ratio to 21.76, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 76.77 | ||
| Fwd PE | 68.51 |
4.2 Price Multiples
Compared to the rest of the industry, the Price/Free Cash Flow ratio of ZS is on the same level as its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 56.59 | ||
| EV/EBITDA | N/A |
4.3 Compensation for Growth
PEG (NY)N/A
PEG (5Y)1.09
EPS Next 2Y7.82%
EPS Next 3Y11.92%
5. Dividend
5.1 Amount
No dividends for ZS!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
254.1
+1.28 (+0.51%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners54.13%
Inst Owner Change10.62%
Ins Owners37.29%
Ins Owner Change2.1%
Market Cap39.31B
Analysts80
Price Target243.55 (-4.15%)
Short Float %7.95%
Short Ratio3.03
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)13.76%
Min EPS beat(2)9.41%
Max EPS beat(2)18.11%
EPS beat(4)4
Avg EPS beat(4)20.21%
Min EPS beat(4)9.41%
Max EPS beat(4)30.36%
EPS beat(8)8
Avg EPS beat(8)22.22%
EPS beat(12)12
Avg EPS beat(12)23.55%
EPS beat(16)16
Avg EPS beat(16)29.03%
Revenue beat(2)1
Avg Revenue beat(2)-0.23%
Min Revenue beat(2)-1.03%
Max Revenue beat(2)0.57%
Revenue beat(4)3
Avg Revenue beat(4)0.28%
Min Revenue beat(4)-1.03%
Max Revenue beat(4)1.35%
Revenue beat(8)6
Avg Revenue beat(8)0.5%
Revenue beat(12)10
Avg Revenue beat(12)0.93%
Revenue beat(16)14
Avg Revenue beat(16)1.77%
PT rev (1m)0.25%
PT rev (3m)4.08%
EPS NQ rev (1m)-0.45%
EPS NQ rev (3m)1.84%
EPS NY rev (1m)-0.27%
EPS NY rev (3m)2.37%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-0.06%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.4%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 76.77 | ||
| Fwd PE | 68.51 | ||
| P/S | 16.23 | ||
| P/FCF | 56.59 | ||
| P/OCF | 44.29 | ||
| P/B | 24.46 | ||
| P/tB | 34.67 | ||
| EV/EBITDA | N/A |
EPS(TTM)3.31
EY1.3%
EPS(NY)3.71
Fwd EY1.46%
FCF(TTM)4.49
FCFY1.77%
OCF(TTM)5.74
OCFY2.26%
SpS15.65
BVpS10.39
TBVpS7.33
PEG (NY)N/A
PEG (5Y)1.09
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -0.31% | ||
| ROE | -0.97% | ||
| ROCE | N/A | ||
| ROIC | N/A | ||
| ROICexc | N/A | ||
| ROICexgc | N/A | ||
| OM | N/A | ||
| PM (TTM) | N/A | ||
| GM | 77.77% | ||
| FCFM | 28.69% |
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 Turnover0.48
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.71 | ||
| Debt/FCF | 1.65 | ||
| Debt/EBITDA | N/A | ||
| Cap/Depr | 193.28% | ||
| Cap/Sales | 7.97% | ||
| Interest Coverage | N/A | ||
| Cash Conversion | N/A | ||
| Profit Quality | N/A | ||
| Current Ratio | 1.2 | ||
| Quick Ratio | 1.2 | ||
| Altman-Z | 7.14 |
F-Score6
WACC10.92%
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)29.8%
EPS 3Y81.9%
EPS 5Y70.72%
EPS Q2Q%2.63%
EPS Next Y-0.94%
EPS Next 2Y7.82%
EPS Next 3Y11.92%
EPS Next 5Y15.5%
Revenue 1Y (TTM)27.77%
Revenue growth 3Y47.68%
Revenue growth 5Y48.24%
Sales Q2Q%23.41%
Revenue Next Year23.65%
Revenue Next 2Y22.08%
Revenue Next 3Y21.49%
Revenue Next 5Y21.34%
EBIT growth 1Y45.3%
EBIT growth 3YN/A
EBIT growth 5YN/A
EBIT Next Year66.45%
EBIT Next 3Y36.88%
EBIT Next 5YN/A
FCF growth 1Y150.86%
FCF growth 3Y59.67%
FCF growth 5Y83.91%
OCF growth 1Y122.87%
OCF growth 3Y56.87%
OCF growth 5Y68.16%