Zscaler, Inc.
Zscaler, Inc. Fundamental Analysis
Zscaler, Inc. (ZS) shows moderate financial fundamentals with a PE ratio of -359.79, profit margin of -2.25%, and ROE of -3.48%. The company generates $3.0B in annual revenue with strong year-over-year growth of 23.31%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 44.7/100 based on profitability, valuation, growth, and balance sheet metrics. The D grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze ZS's fundamental strength across five key dimensions:
Efficiency Score
WeakZS struggles to generate sufficient returns from assets.
Valuation Score
ModerateZS shows balanced valuation metrics.
Growth Score
ExcellentZS delivers strong and consistent growth momentum.
Financial Health Score
ExcellentZS maintains a strong and stable balance sheet.
Profitability Score
WeakZS struggles to sustain strong margins.
Key Financial Metrics
Is ZS Expensive or Cheap?
P/E Ratio
ZS trades at -359.79 times earnings. This suggests potential undervaluation.
PEG Ratio
When adjusting for growth, ZS's PEG of 5.85 indicates potential overvaluation.
Price to Book
The market values Zscaler, Inc. at 11.08 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 173.12 times EBITDA. This signals the market has high growth expectations.
How Well Does ZS Make Money?
Net Profit Margin
For every $100 in sales, Zscaler, Inc. keeps $-2.25 as profit after all expenses.
Operating Margin
Core operations generate -4.76 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $-3.48 in profit for every $100 of shareholder equity.
ROA
Zscaler, Inc. generates $-1.00 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Zscaler, Inc. generates strong operating cash flow of $1.12B, reflecting robust business health.
Free Cash Flow
Zscaler, Inc. generates strong free cash flow of $950.28M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $5.91 in free cash annually.
FCF Yield
ZS converts 3.84% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
-359.79
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
5.85
vs 25 benchmark
P/B Ratio
Price to book value ratio
11.08
vs 25 benchmark
P/S Ratio
Price to sales ratio
8.16
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.85
vs 25 benchmark
Current Ratio
Current assets to current liabilities
1.90
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
-0.03
vs 25 benchmark
ROA
Return on assets percentage
-0.01
vs 25 benchmark
ROCE
Return on capital employed
-0.03
vs 25 benchmark
How ZS Stacks Against Its Sector Peers
| Metric | ZS Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | -359.79 | 34.43 | Better (Cheaper) |
| ROE | -3.48% | 1135.00% | Weak |
| Net Margin | -2.25% | -134663.00% (disorted) | Weak |
| Debt/Equity | 0.85 | 7.92 | Strong (Low Leverage) |
| Current Ratio | 1.90 | 5.77 | Neutral |
| ROA | -1.00% | -310462.00% (disorted) | Weak |
ZS outperforms its industry in 2 out of 6 key metrics, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Zscaler, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
419.14%
Industry Style: Growth, Innovation, High Beta
High GrowthEPS CAGR
69.82%
Industry Style: Growth, Innovation, High Beta
High GrowthFCF CAGR
926.88%
Industry Style: Growth, Innovation, High Beta
High Growth