Zscaler Inc (ZS) stock analysis
Zscaler Inc (ZS) clears 2 of this site's 8 mechanical value filters, 0 of 8 Buffett-style checks and 0 of 5 Lynch-style checks. At $237.76 it trades 195.5% above this site's neutral DCF value (a margin of safety of -195.5%). Its earnings quality rates Weak and it returns −2.1% to shareholders net of dilution. Figures are as of October 23, 2026, from SEC filings and market data refreshed weekly; this is educational analysis, not investment advice.
Data as of October 23, 2026. Refreshed weekly from SEC filings and market data.
What does Zscaler do?
Zscaler sells cloud-delivered security that sits between users and the internet, replacing corporate firewalls and VPNs, on subscription.
What stands out about Zscaler?
- The share price implies 36.5% yearly growth. At $237.76, ZS's free cash flow of $4.71 per share would have to grow 36.5% a year, fading to 2.5% by year 10, for this site's DCF (10% discount rate) to match the price. This site's baseline starts at 8%, so the price asks for more growth than the baseline. Change the assumptions.
- Misses 2 of the 8 value filters. It fails Price/Book < 8 (15.13) and Price/Sales < 7 (11.73); the other 2 pass and 4 were not evaluated. See every filter.
- Weakest against peers: net margin. At −1.9% (peer median 16.9%) it ranks 42nd of 44 among technology stocks this site tracks. See the ranking.
- Earnings quality: Weak · 2 flags. Beneish M-score −2.71 · accruals −16.7% of assets · stock comp 24.5% of revenue · share count +3.5% a year. From the latest 10-K (year to Jul 2026). See the Earnings Quality Screener.
- Short interest is elevated. 5.5% of the float is sold short, 1.8 days to cover, above this site's 5% flag. See the figures.
How has Zscaler's share price moved?
The interactive price chart needs JavaScript.
Is Zscaler undervalued? The value diligence check
Every value-investing signal this site computes for this stock, gathered in one place: the same real numbers from the tools below, not a new score.
- Margin of safety (DCF) -195.5%
- Wall St. analyst rating Buy · 4.07/5 57 analysts this month: 16 strong buy, 29 buy, 12 hold, 0 sell, 0 strong sell (Finnhub).
- Earnings quality (is the profit real?) Weak · 2 flags Beneish M-score −2.71 · accruals −16.7% of assets · stock comp 24.5% of revenue · share count +3.5% a year. From the latest 10-K (year to Jul 2026) - see the Earnings Quality Screener for how each check is scored.
- Shareholder yield (cash back to owners) −2.1% net Latest fiscal year (2026): dividends 0.0% + buybacks 0.0% − stock comp 2.1%, as a share of today's market cap. Stock comp outruns what comes back in cash. Over 7 years its split-adjusted share count rose 30%. See Shareholder Yield Leaders.
- Capital needed to grow (See's test) Profit did not grow in 10 years Operating profit −$35M → −$127M, capital needed −$67M → $1.4B, 2017–2026 (3-year averages); return on capital now −9% before tax. Buffett's See's Candies needed $0.42 per $1 of new profit, FlightSafety $3.20, a typical grower about $5. See Capital-Light Compounders.
- PEG (growth at a reasonable price) n/a (falling or negative earnings)
- Compounder lenses (4) 0 of 4 · misses capital-light, real profit, cash back, price (n/a) Capital-light growth: not cleared (profit started from a loss); Profit is real: not cleared (2 earnings-quality flags); Cash to owners: not cleared (−1.7% a year net); Fair price (PEG): cannot be measured (falling or negative earnings). See Compounders at a Fair Price, which also lets you move the PEG bar.
- Value trap check Clear
- Munger's Inversion Check 3 flags
- Standing vs. sector peers 1 of 5 measures above the median Compared with the 43 other technology stocks this site tracks: 1 in the top third, 3 in the bottom third.
How does Zscaler compare with its peers?
1 of 5 measure sits above the median of the 43 other technology stocks tracked here, 1 in the top third and 3 in the bottom third.
- Free-cash-flow yieldhigher is cheaper · peer median 3.8% 2.0% ✕35th of 44
- Return on equityhigher is better · peer median 24% −3% ✕41st of 44
- Net marginhigher is better · peer median 16.9% −1.9% ✕42nd of 44
- Revenue growthhigher is better, year on year · peer median 19.1% 25.4% ✓15th of 44
- Debt / equitylower is safer · peer median 0.60 0.65 –25th of 44
Peers are the stocks this site tracks in the same sector group, not every listed competitor. The bar runs from the weakest peer (left) to the strongest (right); the tick is the middle. Measures that don't apply to a sector (cash-flow yield for banks, debt for financials) are left out.
What would Buffett & Lynch say?
Buffett's checklist is built around durable, profitable businesses bought at sensible prices, and ZS doesn't clear enough of it yet. Where it comes up short: ZS isn't clearing the return-on-equity bar he'd want to see right now, and its five-year average return on equity falls short too, so this isn't just a one-off dip, carries more debt relative to equity than he typically tolerates, runs thinner pretax margins than he'd like to see, hasn't grown earnings per share fast enough over five years to impress him, doesn't cover its interest expense as comfortably as he'd want, is trading above what a conservative discounted-cash-flow estimate says it's worth right now, and trades rich relative to owner earnings, the real cash the business could pay out.
- ROE (TTM) > 11% ✕
- ROE (5yr avg) > 11% ✕
- Debt/Equity < 0.5 ✕
- Pretax margin > 15% ✕
- EPS growth (5yr) > 7% ✕
- Interest coverage > 5x ✕
- Trading below intrinsic value (DCF) ✕
- Price vs. owner earnings < 25x ✕
Lynch looked for growth stories that weren't overpriced for that growth, and ZS falls short of his bar. Where it comes up short: ZS fails his signature PEG test, he'd call this pricey for the growth on offer, is growing earnings outside the 10–25% range he considered the sustainable sweet spot, is leaning on more debt than he liked a growth story to carry, is asking investors to pay a steep multiple for that growth, and isn't generating free cash flow to match the growth story.
- PEG < 1 ✕
- EPS growth 10%-25% ✕
- Debt/Equity < 0.5 ✕
- P/E < 27 n/a
- Price/FCF < 30 ✕
Quantitative approximations of each investor's documented approach, not endorsed by either investor or their estates - commentary, not this site's actual ranking criteria. Buffett never published a numeric checklist: only 2 of his 8 checks here trace to his own documented concepts ("owner earnings," from his 1986 shareholder letter, and "price is what you pay, value is what you get," his case against fixed P/E/P/B ceilings) - the other 6 (ROE, debt, margins, growth, interest coverage) use commonly-cited thresholds that are not numbers he himself published. The 8 hard filters below (plus the Munger check and Graham margin of safety) are this site's real, mechanical screen and are computed completely independently of the checklists above.
Berkshire Hathaway's own filing
Which of the 8 value filters does Zscaler pass?
- Market Cap > $25B $39.3B
- Trailing P/E < 25 n/a
- PEG Ratio < 1.5 -113.91
- Price/Book < 8 15.13
- Price/Sales < 7 11.73
- EPS Growth YoY > -5% n/a
- vs 50-day MA (±12%) Not evaluated †
- vs 200-day MA (±12%) Not evaluated †
What is Zscaler's margin of safety?
-158% on 2026-10-07 → -196% on 2026-10-23 (5 weekly readings).
Where is Zscaler in its 52-week range?
What is the short interest in Zscaler?
5,802,363 shares short as of 2026-09-30 (FINRA settlement date). Reported twice a month, so this only changes roughly every two weeks, not daily.
What could go wrong with Zscaler? Munger's inversion check
"Invert, always invert." Instead of reasons to buy, these are reasons to hesitate, not a verdict, and not everything worth knowing about a business.
- Margin of safety, even in the bull case -75%
- Short interest under 5% of float 5.5%
- Passes most of the 6 fundamental filters 4/6 passed
- Price run-up backed by value, not just momentum +102% off 52wk low
- Debt/equity stable since 2020 1.78 → 0.90
Doesn't cover circle of competence, management quality, or accounting concerns: those need judgment, not data.
How much have Zscaler shareholders gained per year?
Not enough clean earnings history to compute this for ZS yet - a loss year in the window breaks the growth math rather than faking a number through it.
An earnings-based proxy, not a stock-price total return - it doesn't capture multiple expansion/contraction or reinvested dividends. EPS from ZS's own 10-K filings; dividend yield is the current trailing yield on today's price, from the same weekly fetch as the rest of this site.
What do Zscaler's 10-year financials show?
From ZS's own 10-K filings (SEC EDGAR): up to the last 10 fiscal years. Press any year's bars for the exact figures.
Frequently asked questions about Zscaler
What kind of company is Zscaler?
Zscaler sells cloud-delivered security that sits between users and the internet, replacing corporate firewalls and VPNs, on subscription. This site groups it with Technology stocks.
Is Zscaler trading above or below its DCF value?
At $237.76, ZS trades 195.5% above this site's neutral DCF value of $80.46 per share, a margin of safety of −195.5%. That DCF projects free cash flow for 10 years, with growth starting at 8% and fading to 2.5%, discounted at 10%; it is one set of assumptions, not a forecast. Test your own in the Intrinsic Value Calculator.
How many of this site's 8 value filters does Zscaler pass?
ZS passes 2 of 8. It passes Market Cap > $25B ($39.3B) and PEG Ratio < 1.5 (-113.91). It misses Price/Book < 8 (15.13) and Price/Sales < 7 (11.73). Trailing P/E < 25, EPS Growth YoY > -5%, vs 50-day MA (±12%) and vs 200-day MA (±12%) were not evaluated, because the moving-average checks only run on stocks that clear the fundamentals first. The 8-filter list shows every stock that passes all of them.
Are Zscaler's reported earnings reliable?
This site's earnings-quality check rates ZS Weak · 2 flags. Beneish M-score −2.71 · accruals −16.7% of assets · stock comp 24.5% of revenue · share count +3.5% a year. From the latest 10-K (year to Jul 2026). Concerns: stock-based compensation (flagged) and share dilution (flagged). The five checks are the Beneish M-score (manipulation risk), accruals, cash conversion, stock-based compensation and share dilution; the Earnings Quality Screener shows how each is graded.
How fast has Zscaler grown its revenue and profit?
From fiscal 2017 to fiscal 2026, ZS's revenue grew from $126 million to $3.4 billion, 44.0% a year. Net income went from −$35.0 million to −$63.0 million, and its net profit margin from -27.8% to -1.9%. In fiscal 2026 it produced $853 million of free cash flow (cash from operations minus capital spending), 25.4% of its revenue. All figures are from ZS's own 10-K filings (SEC EDGAR) and are shown year by year in the 10-Year Financials section of the card above.
How heavily is Zscaler stock sold short?
As of September 30, 2026, 5.5% of ZS's float was sold short (5,802,363 shares, 1.8 days to cover), down 10.8% from the prior reporting period. FINRA publishes short interest twice a month, so it changes about every two weeks; this site flags anything above 5% of the float.
Where do these numbers come from?
- Financial statements: Zscaler's 10-K annual report for the year ended Jul 31, 2026, filed Sep 3, 2026 (filing index). Every earlier year in the 10-year financials comes from the company's older 10-K filings, all listed on SEC EDGAR.
- Prices and market data: quotes, P/E and analyst ratings from Finnhub; daily price history and the 52-week range from Twelve Data, both refreshed weekly. Short interest comes from FINRA, reported twice a month.
- How to check a figure: click any number in the card above to see its exact source, and read the Editorial Standards for every rule behind the checks.
About this Zscaler Inc analysis
This page shows every value-investing check the site runs on Zscaler Inc (ZS) in one place: the 8 mechanical filters, the Buffett and Lynch checklists, a margin of safety from a disclosed DCF, earnings quality, shareholder yield and how it ranks against its sector peers. The numbers come from SEC filings and public market data, refreshed weekly, and the same rules apply to every stock on the stock list. See Editorial Standards for the sources and the rules, or run your own filters in the stock screener.