Financial Analysis: Zscaler (ZS) & Its Peers

Zscaler (NASDAQ: ZS) is one of 38 publicly-traded companies in the “Custom computer programming services” industry, but how does it contrast to its peers? We will compare Zscaler to related businesses based on the strength of its institutional ownership, analyst recommendations, risk, profitability, dividends, valuation and earnings.

Profitability

This table compares Zscaler and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Zscaler N/A N/A N/A
Zscaler Competitors 1.15% 97.74% 4.71%

Institutional & Insider Ownership

23.0% of Zscaler shares are held by institutional investors. Comparatively, 59.0% of shares of all “Custom computer programming services” companies are held by institutional investors. 11.7% of shares of all “Custom computer programming services” companies are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings for Zscaler and its peers, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Zscaler 0 8 2 1 2.36
Zscaler Competitors 228 940 1596 70 2.53

Zscaler presently has a consensus price target of $35.86, suggesting a potential downside of 3.18%. As a group, “Custom computer programming services” companies have a potential upside of 4.04%. Given Zscaler’s peers stronger consensus rating and higher possible upside, analysts clearly believe Zscaler has less favorable growth aspects than its peers.

Valuation and Earnings

This table compares Zscaler and its peers revenue, earnings per share (EPS) and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Zscaler $190.17 million -$33.64 million -119.48
Zscaler Competitors $2.00 billion $177.09 million -3.35

Zscaler’s peers have higher revenue and earnings than Zscaler. Zscaler is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Summary

Zscaler peers beat Zscaler on 11 of the 12 factors compared.

Zscaler Company Profile

Zscaler, Inc. operates as a cloud security company worldwide. The company develops a software-as-a-service based security platform that secures access for users and devices to applications and services. It serves airline and transportation, conglomerate, consumer good and retail, financial service, healthcare, manufacturing, media and communication, public sector and education, technology, and telecommunications service 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.

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