Zscaler’s ZS shares have soared 101.1% year to date, leaving the Zacks Computer and Technology sector’s growth of 53.1% in the dust. Not to mention, it has trumped the year-to-date return of major stock market indexes, including the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite, which have recorded gains of 14.5%, 25%, and 44.3%, respectively.
The bullish fervor springs from the unwavering belief in Zscaler’s strategic positioning, unparalleled financial performance, and relentless focus on expanding its product portfolio to address current cybersecurity challenges.
Azure Profits and Potential
ZS has achieved sustained growth in revenues and profits across numerous quarters due to the high demand for its cybersecurity solutions. Furthermore, the company boasts an exceptional earnings surprise history, consistently surpassing estimates in each of the past four quarters, with an average surprise of 27.31%.
Adding to the allure, earnings estimates for the current and next fiscal year have surged, signaling robust inherent growth potential. Notably, ZS has a long-term earnings growth expectation of 37%.
Zscaler’s stunning growth is underpinned by its robust suite of cybersecurity and networking solutions, which have gained traction thanks to the proliferation of hybrid work setups.
Amid the global shift to remote or hybrid work, there is an escalating need for cybersecurity solutions to shield exposed networks. According to Grand View Research, the global cybersecurity market is poised to witness a CAGR of 12.3% from 2023 to 2030, auguring well for Zscaler with its diverse cybersecurity product portfolio.
The company’s offerings, including Zscaler Internet Access (ZIA), Zscaler Private Access (ZPA), and Zscaler Digital Experience (ZDX), are tailored to create a secure cyber environment. The staggering revelation that approximately 50% of its customers have procured all its offerings in the first quarter of 2024 testifies to Zscaler’s market appeal and efficacy.
The Road Ahead
Predictions from MarketsAndMarkets suggest that the SD-WAN market could swell from $3.4 billion in 2022 to $13.7 billion by 2027, with a significant annual growth rate of 31.9%. As few vendors offer both security and SD-WAN solutions, Zscaler is poised to capitalize on this expanding market. Moreover, its partnerships with VMware and Silver Peak further reinforce its position in this sphere.
ZS has also made strategic acquisitions in recent years to broaden its portfolio. These moves have not only amplified the company’s data-protection capabilities but also broadened its customer base.
A Glimpse of the Competition
Other top-ranked stocks in the broader technology sector include Kanzhun BZ, Ceridian HCM CDAY, and CommVault Systems CVLT, each flaunting a Zacks Rank #1 at present.
However, while these stocks are worth keeping an eye on, it’s evident that ZS is currently a standout investment option with its healthy fundamentals.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.