Is Now The Right Time For Zscaler Stock?

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Zscaler (ZS) stock has returned 73.2% over the past three months, compared with 3.1% for the S&P 500. That bounce follows a long slide, and shares remain 24.1% below their highest close of the past year, set in November 2025. Buying at $255.15 means betting that Zscaler’s growth holds up. So, have you already missed the cheap price in Zscaler?

What Are You Paying For Zscaler Stock Now?

The cheapest price of recent years has passed. At the latest close, Zscaler traded at 12.3 times its sales over the past twelve months. At the end of June 2026, those same sales were priced at 6.8 times, the lowest multiple at any of the last 34 quarter ends.

Because Zscaler still reports a loss, a price-to-earnings ratio means nothing here. Over the four quarters to July 2026, the company posted an operating loss of 3.6% of revenue, though that was the smallest loss at any of 35 quarter ends since fiscal 2018. The business runs on cash instead: Zscaler generated $1.13 billion in operating cash over those twelve months, and the stock trades at 36.6 times that cash flow, compared with 15.3 times for the S&P 500.

Behind that cash generation is a subscription base that is still growing fast. On the September 3 call, management said annual recurring revenue reached $3.8 billion in fiscal Q4 2026, up 25% from a year earlier. They added that growth in newly added recurring revenue, excluding Red Canary, picked up from 7% in fiscal 2025 to 17% in fiscal Q4 2026.

What Must Zscaler Deliver In Fiscal Q1 2027?

The bar for Zscaler is management’s own guidance. Management guided fiscal Q1 2027 revenue of $935 million to $939 million and reaffirmed that range at its Investor Day on October 6.

For the full year, management has guided to slower growth, forecasting revenue to rise 16.6% to 17.5% in fiscal 2027, compared with 25.4% in fiscal 2026. Part of the growth in fiscal 2026 came from Red Canary, a business Zscaler acquired, which added $144 million of revenue. Excluding Red Canary, revenue grew 20%.

Management said AI is driving demand for its Zero Trust platform and data security. The company has not called out the contribution from security for AI in its guidance.

Zscaler Stock Has Mostly Fallen After Its Reports

Over the company’s last six reports, shares fell in the two trading days following five of them. The deepest decline was a 29.6% drop after the May 2026 report, while the sole gain was a 16.8% rise following the May 2025 report.

Large swings are not new for the stock. During the 2022 inflation shock, Zscaler fell 58%, against 24% for the S&P 500.

Zscaler is expected to report fiscal Q1 2027 results in November 2026. In that report, the number to watch is revenue against management’s guidance of $935 million to $939 million.

Does This Mean You Should Act On ZS?

Our purpose is to inform you with unique data so you make the right investment decisions. That said, betting on a single stock is always risky, no matter which direction you choose.

There is a smarter approach. Since its inception, the Trefis High Quality (HQ) Portfolio has returned 105%, beating the benchmark that combines the three major indices – the S&P 500, S&P Mid-cap, and Russell 2000. And it did so without taking the concentrated risk that comes with do-it-yourself stock picking. If that is how you want to invest, the HQ Portfolio is the place to start.

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