Zscaler, Inc. (NASDAQ: ZS)

Sector: Technology Industry: Software - Infrastructure CIK: 0001713683
P/B 18.54
P/E -895.31
P/S 12.97
Market Cap 36.75 Bn
ROIC (Qtr) -5.02
Div Yield % 0.00
Rev 1y % (Qtr) 25.50
Total Debt (Qtr) 1.83 Bn
Debt/Equity (Qtr) 0.93

About

Zscaler, Inc., often recognized by its ticker symbol ZS, operates in the cybersecurity industry, providing a comprehensive suite of cloud-based security solutions. The company's primary business activities involve offering cloud-based security solutions that enable organizations to securely connect users, devices, and applications over any network. Zscaler's operations span various countries and regions, with a focus on larger organizations across all major industries. Zscaler's revenue is generated through its primary products and services, including...

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Stock Price Chart

Analysis

Pros

  • Strong operating cash flow of 1.09B provides robust 0.59x coverage of total debt 1.83B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 1.34B provide 19.56x coverage of short-term debt 68.40M, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of 1.09B provides exceptional 128.07x coverage of interest expenses 8.51M, showing strong debt service capability.
  • Robust free cash flow of 848.11M exceeds capital expenditure of 241.29M by 3.51x, indicating strong organic growth funding capability.
  • Strong tangible asset base of 5.29B provides 2.89x coverage of total debt 1.83B, indicating robust asset backing and low credit risk.

Cons

  • Operating cash flow of 1.09B barely covers its investment activities of (1.73B), with a coverage ratio of -0.63, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (1.73B) provide weak support for R&D spending of 718.73M, which is -2.40x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Cash reserves of 1.34B provide limited coverage of acquisition spending of (673.61M), which is -1.99x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 1.09B provides insufficient coverage of deferred revenue obligations of 2.35B, which is 0.46x, raising concerns about future service delivery capabilities.
  • The company's operating cash flow of 1.09B shows concerning coverage of stock compensation expenses of 692.76M, with a 1.57 ratio indicating potential earnings quality issues.

Peer Comparison

Companies in the Software - Infrastructure
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MSFT Microsoft Corp 3,542.10 Bn 33.76 12.06 60.56 Bn
2 ORCL Oracle Corp 533.93 Bn 34.61 8.75 124.39 Bn
3 PLTR Palantir Technologies Inc. 437.56 Bn 399.47 112.31 0.24 Bn
4 PANW Palo Alto Networks Inc 125.16 Bn 112.03 13.10 0.35 Bn
5 CRWD CrowdStrike Holdings, Inc. 120.85 Bn -384.67 26.47 0.82 Bn
6 SNPS Synopsys Inc 71.69 Bn 35.89 11.14 15.14 Bn
7 NET Cloudflare, Inc. 67.84 Bn -658.43 33.70 3.50 Bn
8 FTNT Fortinet, Inc. 63.33 Bn 33.80 9.66 1.00 Bn

Industry Comparisons

Current Valuation

Metric Value Industry Percentile
EV to Assets 5.56 2.56
EV to Cash from Ops. 33.19 38.32
EV to Debt 19.71 -11.37
EV to EBIT -2,630.25 -12.79
EV to EBITDA 528.29 7.72
EV to Free Cash Flow [EV/FCF] 42.63 24.22
EV to Market Cap 0.98 0.58
EV to Revenue 12.76 -35.00
Price to Book Value [P/B] 18.54 3.74
Price to Earnings [P/E] -895.31 -18.61

Dividend Metrics

Metric Value Industry Percentile
Dividend Coverage Ratio 0.00 -0.30
Dividend Payout Ratio % 0.00 2.69
Dividend per Basic Share 0.00 0.10
FCF Dividend Payout Ratio % 0.00 1.67
Interest Coverage -1.62 -13.15

Growth Metrics

Metric Value Industry Percentile
Capex Growth (1y) % -21.70 -404.11
Cash and Equivalents Growth (1y) % -13.87 226.02
Dividend Growth (1y) % 0.00 -0.27
EBIAT Growth (1y) % -261.66 31.15
EBITDA Growth (1y) % 76.79 49.02
EBIT Growth (1y) % -447.18 25.85
EBT Growth (1y) % -142.99 17.82
EPS Growth (1y) % -8.33 70.69
FCF Growth (1y) % 30.06 295.45
Gross Profit Growth (1y) % 21.21 49.96

Liquidity Ratios

Metric Value Industry Percentile
Asset Utilization Ratio 0.44 0.68
Cash Payout Ratio 0.00 0.02
Cash Ratio 0.58 1.21
Current Ratio 1.82 2.57
Debt to Equity Ratio 0.93 -0.93
Interest Cover Ratio -1.62 -13.15
Times Interest Earned -1.62 -13.15

Profitability

Metric Value Industry Percentile
EBITDA Margin % 6.70 -544.82
EBIT Margin % -0.49 -197.78
EBT Margin % -0.79 -602.74
Gross Margin % 76.70 52.06
Net Profit Margin % -1.40 -605.52