Zscaler (ZS) has reported strong quarterly earnings, exceeding both analysts’ expectations and its own performance from the previous year. The company, which provides cloud-based information security solutions, generated $0.88 per share in earnings for the quarter ended July 2024, surpassing the Zacks Consensus Estimate of $0.69 per share. This represents a 27.54% earnings surprise. Revenue also surpassed expectations, reaching $592.87 million, exceeding the consensus estimate by 4.45%. This marked the fourth consecutive quarter where Zscaler has outperformed revenue forecasts.
However, despite this positive performance, Zscaler’s stock has struggled this year, losing almost 10% of its value since the start of 2024, while the S&P 500 has gained 18.4%. This raises the question of what’s next for Zscaler, a question that’s on the minds of many investors.
While there are no straightforward answers, one key indicator to watch is the company’s earnings outlook. This includes not only the current consensus earnings expectations for the coming quarters but also how these expectations have changed recently. Research has shown a strong correlation between short-term stock movements and trends in earnings estimate revisions.
Currently, the estimate revisions trend for Zscaler is mixed. This translates into a Zacks Rank of #3 (Hold) for the stock, implying that it is expected to perform in line with the market in the near future. However, the magnitude and direction of estimate revisions could change following the release of the earnings report, making it crucial to monitor these changes closely.
The current consensus EPS estimate for the coming quarter is $0.72 on $598.89 million in revenues. For the current fiscal year, the consensus EPS estimate stands at $3.27 on $2.6 billion in revenues.
It’s important to note that the overall outlook for the Internet – Services industry can also significantly impact the performance of Zscaler’s stock. The industry currently ranks in the top 31% of the 250 plus Zacks industries, indicating a strong performance compared to other industries.
Looking beyond Zscaler, another company in the broader Zacks Computer and Technology sector, Ciena (CIEN), is also set to report its earnings for the quarter ended July 2024 on September 4. The consensus EPS estimate for the quarter is $0.26 per share, representing a year-over-year decline of 55.9%. Ciena’s revenues are expected to be $927.49 million, down 13.2% from the previous year.
