Zscaler, Inc. (NASDAQ:ZS) Quarterly Earnings Preview

• Projected Revenue Growth: Zscaler's revenue is expected to grow by 21.9% year-over-year, reaching $605.68 million.
• Stable EPS Estimates: Analysts have maintained their EPS estimate of $0.63 for the quarter, indicating stability in expectations.
• Valuation Metrics: Despite challenges with profitability, Zscaler's valuation metrics such as a price-to-sales ratio of 14.79 and an enterprise value to sales ratio of 14.71 provide insight into its market valuation.

Zscaler, Inc. (NASDAQ:ZS) is a leading cloud security company that provides internet security services to businesses worldwide. The company focuses on securing internet connections and protecting data for its clients. Zscaler competes with other cybersecurity firms like Palo Alto Networks and Fortinet. As Zscaler prepares to release its quarterly earnings on December 2, 2024, investors are keenly watching the company's financial performance.

Wall Street analysts estimate Zscaler's earnings per share (EPS) to be $0.63 for the quarter ended October 2024. This represents a 6% decline compared to the same period last year. Despite this decrease in EPS, the company's revenue is projected to reach $605.68 million, marking a significant 21.9% increase from the previous year. This growth in revenue highlights Zscaler's ability to expand its market presence and attract more customers.

Over the past month, there have been no changes in the consensus EPS estimate for Zscaler, indicating that analysts have maintained their initial forecasts. This stability in earnings estimates is crucial, as revisions can significantly influence investor reactions and the short-term price performance of a stock. Investors often look for consistency in analyst expectations as a sign of confidence in the company's future performance.

Zscaler's valuation metrics provide insight into its financial standing. The company has a price-to-sales ratio of approximately 14.79 and an enterprise value to sales ratio of about 14.71. These ratios indicate how the market values Zscaler relative to its revenue. Additionally, the enterprise value to operating cash flow ratio is around 40.88, suggesting how the company's cash flow is valued in relation to its enterprise value.

Despite these metrics, Zscaler faces challenges with profitability. The company has a negative earnings yield of -0.18% and a negative price-to-earnings ratio of -552.11, indicating it is currently not profitable. However, Zscaler maintains a debt-to-equity ratio of approximately 0.90, reflecting its financial leverage, and a current ratio of about 1.09, indicating its ability to cover short-term liabilities with short-term assets.