Shares of cloud security platform Zscaler (ZS, Financial) dropped 18.67% in pre-market trading after the company released its second-quarter earnings results. The company's billings guidance for the next year was slightly below expectations. Management indicated a "year-over-year billings growth of approximately 13% in the first half, accelerating to 23% growth in the second half," which caused market concerns. Despite this, Zscaler surpassed analysts' expectations for billings, revenue, and operating income in the current quarter.
Currently, Zscaler (ZS, Financial) is trading at $157.13 with a market cap of approximately $23.75 billion. Notably, the stock has witnessed a significant decline of 36.06% in price change, and the stock has a price-to-book (P/B) ratio of 21.73.
The GF Value of Zscaler is calculated to be $246.77, indicating that it is Significantly Undervalued. In addition, the company has some positive indicators, including a strong Altman Z-score of 6.28 and a Beneish M-Score of -2.71, suggesting that it is unlikely to be a manipulator. However, there are warning signs including a declining operating margin and faster asset growth compared to revenue growth over the past five years.
Interestingly, Zscaler's cash flow growth metrics paint a more optimistic picture. The company's operating cashflow growth over the last year stands at 60%, with a remarkable 127.6% growth over the past five years. Additionally, the book value growth over the last year is an impressive 75.3%, with a five-year growth rate of 18.9%.
Despite the current setbacks and market concerns, Zscaler's strong financial health and promising growth prospects indicate potential for future recovery and growth. Investors should closely monitor the company's performance in the coming quarters and consider the long-term potential of Zscaler's (ZS, Financial) cloud security platform in the evolving cybersecurity market.
