Zscaler Inc. (ZS) Shares: Cheap or Risky?

Zscaler Inc. (NASDAQ:ZS) saw an upside of 0.39% to close Monday at $267.70 after adding $1.04 on the day. The 5-day average trading volume is 1,513,640 shares of the company’s common stock. It has gained $274.24 in the past week. An average of 1,871,795 shares of the company has been traded in the last 20 days, and the 50-day average volume stands at 1,680,316.

ZS’s 1-month performance is -1.09% or -$2.94 on its low of $248.33 reached on 10/04/21. The company’s shares have touched a 52-week low of $120.34 and high of $293.44, with the stock’s rally to the 52-week high happening on 09/07/21. YTD, ZS has achieved 34.04% or $67.99. However, the current price is down -8.77%% from the 52-week high price.


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Insider Transactions

On Oct 06, 6 days have gone by since the last insider trading activity for Zscaler Inc. (ZS). CANESSA REMO (Chief Financial Officer) most recently sold 20,000 shares at $263.03 per share on Oct 06. This transaction cost the insider $5,260,542. Pres Go-To-Mkt/ Chief Rev Ofcr, Rajic Dali, sold 20,000 shares at a price of $262.00 on Oct 06. Then, on Oct 01, Director Brown Andrew William Fraser sold 20,000 shares at a price of $263.06 per share. This transaction amounted to $5,261,261.

Valuation Metrics

Zscaler Inc. (ZS) has a trailing price-to-earnings (P/E) ratio of 29.20 for the broader industry and 36.91 for the sector.ZS stock has a beta of 0.86. Moving on to other valuation ratios, the trailing price-to-sales (P/S) ratio is 55.84 while the price-to-book (PB) in the most recent quarter is 69.71, with the price to cash flow ratio at 244.39.

Zscaler Inc.’s quick ratio for the period ended July 30 was 2.60, with the current ratio over the same period at 2.60 meaning that ZS stock is able to fulfill its debt obligations. As well, the company’s long term debt to equity for the quarter ending July 30 was 1.73, while the total debt to equity was 1.73. In terms of profitability, the gross margin trailing 12 months is 77.70%. The trailing 12-month EBITDA margin is -16.25% while for the period ending July 30; Zscaler Inc.’s operating margin was -30.90%. The firm’s gross profit as reported stood at $522.78 million against revenue of $673.1 million.

Earnings Surprise

For the quarterly period ending July 30 this year, Zscaler Inc.’s cash and short-term investments amounted to $1.36 billion against total debt of $964.6 million. Net income and sales went up compared to those figures reported in the previous quarter. Net income grew 37.35% to $176.4 million, while revenue of $157.04 million was 10.98% off the previous quarter. Analysts expected ZS to announce $0.09 per share in earnings in its latest quarter, but it posted $0.14, representing a 55.60% surprise. EBITDA for the quarter stood at more than -$31.81 million. ZS stock balance sheet for the quarter ending July 30 shows that total liabilities totaled 1.73 billion, with total debt at $964.6 million. Shareholders hold equity totaling $138.74 million

Technical Picture

Let’s look briefly at Zscaler Inc. (ZS) price momentum from a technical analysis perspective. The 9-day relative strength index as at close on 11 October was 51.71% to suggest the stock is trending Neutral, with historical volatility in this time period at 44.94%.

The stock’s 5-day moving average is $265.40, reflecting a +6.29% or $15.84 change from its current price. ZS is currently trading -0.05% above its 20-day SMA, +62.43% above its 100-day SMA. However, the stock’s current price level is away from the SMA50 and SMA200 by +13.48% and +29.03% respectively.

Stochastic %K and %D was 58.83% and 53.85% and the average true range (ATR) pointed at 9.00. The RSI (14) points at 51.60%, while the 14-day stochastic is at 57.70% with the period’s ATR at 8.79. The stock’s 9-day MACD Oscillator is pointing at 5.51 and 1.49 on the 14-day charts.

Analyst Ratings

In the most recent analyst report for Zscaler Inc. (NASDAQ: ZS), Daiwa Securities launched coverage with a Neutral rating. Analysts offering their rating for ZS stock have a consensus rating for the stock as Overweight. Currently, 0 brokerage advisors rate ZS as a “sell,”, while 9 advise that investors “Hold.” 1 analysts have rated the stock as underweight. 1 rates the stock as overweight while 17 have offered a “buy” rating.

What is ZS’s price target for the next 12 months?

Analysts have a consensus price target ranging from a low of $266.00 and a high of $345.00, with their median price target at $320.00. Looking at these predictions, the average price target given by analysts is for Zscaler Inc. (ZS) stock is $313.27.

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