The stock cost of cloud security firm Zscaler Inc. (NASDAQ:ZS) skyrocketed a lot more than 29% on Friday to trade at $ninety eight for every share pursuing the company’s most up-to-date earnings results.
Zscaler smashed analysts’ anticipations on income and earnings. Non-GAAP earnings of seven cents for every share outperformed Zacks consensus estimate of 2 cents and income beat forecasts by three.85%.
The firm offers online entry solutions to customers globally that connect them to externally managed programs this sort of as SaaS. It also delivers private entry solutions to present entry to internally managed programs hosted in data centers or in private and community clouds.
Zscaler’s items have witnessed a ramp-up in demand from customers pursuing the coronavirus pandemic as a lot more companies and establishments shift operations to distant networks. Chairman and CEO Jay Chaudhry stated in a press launch that “the mitigation routines taken by every single organization in response to the COVID-19 pandemic established an fast will need for potent security and entry to the online and business programs, all even though doing work from everywhere.”
Highlights from the third-quarter results
For the quarter, Zscaler documented a forty% enhance in income from the prior-12 months quarter to $110.5 million. Whole billings for the period scaled fifty five% larger to $131.three million, even though non-GAAP internet earnings arrived in at $9 million, or earnings of seven earnings for every share, up from $seven.four million, or 5 cents for every share, final 12 months.
The company’s income and income equivalents as of April 30 stood at $391.three million. This provides Zscaler the flexibility it desires amid the coronavirus pandemic.
It lately made some essential acquisitions in a bid to strengthen its grip on the online security business. In April, the San Jose, California-based firm acquired Cloudneeti Corp., a cloud security posture administration firm specializing on SaaS, IaaS and PaaS programs.
In Could, it acquired Edgewise Networks, just one of the foremost gamers in software-to-software communications security for community clouds and data centers. The firm is strategically positioned to capitalize on the prospect established by the speedy rise in distant doing work amid the coronavirus lockdown.
Zscaler expects to publish earnings of twenty cents to 21 cents for every share on income of $422 million to $424 million for total fiscal 2020. In the fourth quarter, earnings are predicted to be 2 cents to three cents for every share on $117 million to $119 million in product sales.
Froma valuation viewpoint, shares of Zscaler appear to be relatively expensive compared to its rivals. The firm trades at a ahead cost-earnings ratio of 333 and a cost-earnings to advancement ratio (five-12 months predicted) of seven.13. Its cost-product sales ratio of 26.68 is also relatively larger compared to its friends.
For occasion, Palo Alto Networks Inc. (NYSE:PANW) is at present valued at a ahead cost-earnings ratio of forty.three. Its PEG ratio stands at 2.46, even though the product sales multiple is six.86. On the other hand, Fortinet Inc. (NASDAQ:FTNT) trades at a ahead cost-earnings ratio of 49.fifty one, a PEG ratio of 2.ninety six and a cost-product sales ratio of 10.64.
Overall, Zscaler’s recent gains appear to have pushed the company’s valuation multiples even larger. It remains to be found whether or not there is a lot more home for extended gains in the coming months. With demand from customers for online security ramping up, however,there could be an prospect to capitalize, which could enhance advancement.
Disclosure: No positions in the stocks mentioned.
Go through a lot more listed here:
Not a Quality Member of GuruFocus? Indicator up for a free seven-day trial listed here.
About the writer:
Nicholas is the founder of CAGR Worth. He is a economical analyst with intensive experience in expense investigation and stock market place investigation. His investigation has been highlighted on many investigation sites.
Nicholas has solid know-how of each U.S. and European markets. His expense model is targeted on undervalued performs and advancement stocks. Nicholas classifies himself as a swing trader and likes to trade GBP/USD, gold and FTSE 100, amid other liquid devices.
Go to Nicholas Kitonyi’s Site