Time To Buy The Dip In Zscaler Stock?
Zscaler (ZS) stock has fallen by 16.7% in less than a month, from $167.36 on 26th Feb, 2026 to $139.41 now. Should you buy this dip?
Dip buying is a viable strategy for quality stocks that have a history of recovering from dips. As it turns out, ZS stock passes basic quality checks. Historically, the median return for the 12-month period following sharp dips was 8.5% , with median peak return reaching 33%. We define sharp dip as stock going down 20% or more, in less than 30 day period.
Below, we get into details of historical dips and subsequent returns.
Historical Median Returns Post Dips
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| Period | Past Median Return |
|---|---|
| 1M | -5.9% |
| 3M | -7.1% |
| 6M | -10.3% |
| 12M | 8.5% |
Historical Dip-Wise Details
ZS had 11 events since 3/16/2018 where the dip threshold of -20% within 30 days was triggered
- 33% median peak return within 1 year of dip event
- 290 days is the median time to peak return after a dip event
- -40% median max drawdown within 1 year of dip event
| 30 Day Dip | ZS Subsequent Performance | |||||||
|---|---|---|---|---|---|---|---|---|
| Date | ZS | SPY | 1Y | Peak Return |
Max Drop |
# Days to Peak |
||
| Median | 9% | 33% | -40% | 290 | ||||
| 12022025 | -21% | 2% | -42% | 1% | -42% | 6 | ||
| 3222024 | -22% | 5% | 9% | 11% | -20% | 333 | ||
| 3172023 | -25% | -6% | 85% | 142% | -18% | 329 | ||
| 10242022 | -23% | -7% | 6% | 16% | -41% | 352 | ||
| 5062022 | -27% | -9% | -36% | 12% | -50% | 129 | ||
| 3142022 | -21% | -6% | -43% | 33% | -45% | 21 | ||
| 1042022 | -24% | 2% | -63% | 2% | -62% | 42 | ||
| 3082021 | -23% | -0% | 22% | 120% | -4% | 256 | ||
| 3092020 | -24% | -17% | 313% | 415% | -10% | 340 | ||
| 9032019 | -22% | -2% | 143% | 143% | -40% | 364 | ||
| 10092018 | -24% | -0% | 32% | 147% | -10% | 290 | ||
Zscaler Passes Basic Financial Quality Checks
Revenue growth, profitability, cash flow, and balance sheet strength need to be evaluated to reduce the risk of a dip being the sign of a deteriorating business situation.
| Quality Metrics | Value | Quality Check |
|---|---|---|
| Revenue Growth (LTM) | 23.9% | Pass |
| Revenue Growth (3-Yr Avg) | 30.8% | Pass |
| Operating Cash Flow Margin (LTM) | 37.1% | Pass |
| Leverage (see below) | – | Pass |
| => Interest Coverage Ratio | -5.7 | |
| => Cash To Interest Expense Ratio | 866.3 |
Not sure if you can take a call on ZS stock? Consider portfolio approach
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