Stock of the Day

June 3, 2024

Zscaler (ZS)

$198.56
-$8.41 (-4.1%)
Market Cap: $31.76B

About Zscaler

Zscaler, Inc. operates as a cloud security company worldwide. The company offers Zscaler Internet Access solution that provides users, workloads, IoT, and OT devices secure access to externally managed applications, including software-as-a-service (SaaS) applications and internet destinations; and Zscaler Private Access solution, which is designed to provide access to managed applications hosted internally in data centers, and private or public clouds. It also provides Zscaler Digital Experience that measures end-to-end user experience across business applications, as well as provides an easy-to-understand digital experience score for each user, application, and location within an enterprise. In addition, the company offers Posture Control solutions comprising Cloud Security Posture Management that identifies and remediates application misconfigurations in SaaS, infrastructure as a service, and PaaS to reduce risk and ensure compliance with industry and organizational benchmarks; Cloud Infrastructure Entitlement Management that detects and remediates excessive or unused cloud permissions and enforces least privileged access without disrupting productivity; Infrastructure as Code (IaC), which analyzes IaC templates to identify misconfigurations and other security issues prior to deployment to cloud infrastructure; and Vulnerability Scanning and Data Loss Prevention solutions. Its platform modules include Zscaler Central Authority, Zscaler Enforcement Node, and Zscaler Log Servers. The company serves customers in airlines and transportation, conglomerates, consumer goods and retail, financial services, healthcare, manufacturing, media and communications, public sector and education, technology, and telecommunications services industries. The company was formerly known as SafeChannel, Inc., and changed its name to Zscaler, Inc. in August 2008. Zscaler, Inc. was incorporated in 2007 and is headquartered in San Jose, California.

Zscaler Bull Case

Here are some ways that investors could benefit from investing in Zscaler, Inc.:

  • Zscaler, Inc. reported earnings per share (EPS) of $0.77, exceeding analysts' expectations of $0.63, indicating strong financial performance and potential for growth.
  • The company achieved a revenue of $628 million for the quarter, surpassing estimates of $605.51 million, showcasing robust demand for its cloud security solutions.
  • With a year-over-year revenue increase of 26.4%, Zscaler, Inc. demonstrates significant growth momentum, which could attract more investors looking for expanding companies.
  • The current stock price is approximately $205.53, reflecting a recent increase of 0.6%, which may indicate positive market sentiment towards the company.
  • Institutional investors own 46.45% of Zscaler, Inc.'s stock, suggesting confidence from large financial entities in the company's future prospects.

Zscaler Bear Case

Investors should be bearish about investing in Zscaler, Inc. for these reasons:

  • Zscaler, Inc. has a negative net margin of 1.58%, which indicates that the company is currently not profitable, raising concerns about its financial health.
  • The company has a negative return on equity of 0.75%, suggesting that it is not generating sufficient returns for its shareholders, which could deter potential investors.
  • Analysts forecast a projected EPS of -0.1 for the current fiscal year, indicating expectations of continued losses, which may signal a challenging financial outlook.
  • Insider selling activity has been noted, with executives selling a total of 10,248 shares valued at over $2 million in the last quarter, which could raise red flags about their confidence in the company's future.
  • The stock has a high price-to-earnings (PE) ratio of -822.12, which is atypical and may suggest that the stock is overvalued relative to its earnings, posing a risk for investors.

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