Zscaler (ZS, Financial) stock is seeing a notable increase today, with the stock price rising by 5.39% to reach $207.03. This surge follows the release of its recent earnings report, which has impressed investors and analysts alike.
Zscaler has delivered an impressive second-quarter performance for the 2025 fiscal year, with adjusted earnings per share (EPS) reaching $0.78 and revenue hitting $647.9 million. These figures surpassed expectations, where analysts anticipated EPS of $0.69 and revenue of $635.45 million.
The company's year-over-year revenue growth soared by 23.4%, and its deferred revenue grew by 25% to approximately $1.88 billion. This solid performance underscores Zscaler's capability to deliver consistent growth.
Looking forward, Zscaler has issued guidance for the fiscal third quarter, with projected revenue between $665 million and $667 million. Although this range is slightly below the Wall Street consensus of $667.25 million, the anticipated adjusted EPS of $0.75 to $0.76 surpasses analysts' expectations of $0.74.
For the full fiscal year, Zscaler sets ambitious targets with projected sales of $2.64 billion to $2.654 billion and an EPS between $3.04 and $3.09, both figures exceeding Wall Street estimates.
In terms of valuation, Zscaler (ZS, Financial) is deemed "Modestly Undervalued" according to its GF Value, with a calculated GF Value of $244.56. This valuation indicates potential upside, considering the current stock price. Furthermore, among Zscaler's financial strengths are its Altman Z-Score of 5.69, indicating a strong financial position, and a Beneish M-Score of -2.89, suggesting a low likelihood of earnings manipulation.
Despite these strengths, investors should be aware of the warning signs, such as the quicker asset growth compared to revenue growth over the past five years, potentially indicating decreased efficiency. Additionally, recent insider selling activity could be a point of consideration for potential investors.
Overall, Zscaler remains a key player in the cloud security domain, exhibiting robust financial performance and promising growth prospects. However, investors should weigh the potential risks alongside the opportunities presented.
