Zscaler Inc. Common Stock (ZS)

FairStock Score: 45/100 — MIXED

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

I look at Zscaler through both Graham's bargain lens and Buffett's business-quality lens. The company provides cloud security, and demand is clearly strong: in fiscal Q3 2026, the quarter ended 2026-04-30, filed revenue was $850.5M versus $678.0M in fiscal Q3 2025, the quarter ended 2025-04-30. For FY2026, ended 2026-07-31, filed revenue was $3.4B, net income was -$63.2M, and diluted EPS was -$0.39; FY2025 had $2.7B revenue, -$41.5M net income, and -$0.27 EPS. So sales are compounding near 25%, but losses persist and even widened on a full-year basis. That fails Graham's earnings test. FairStock's price-based calculations at the 2026-10-13 close of $228.66 show a P/E of -586.31, P/B of 14.35, EV/EBITDA of 216.54, and FCF yield of 2.1%. The Piotroski F-Score is 4/9, Altman Z-Score is 4.45, debt-to-equity is 0.72, and ROE is -2.87%, ROCE is -1.03%. Free cash flow of $779.1M is a genuine positive, but a 2.1% FCF yield does not compensate for weak accounting profits. FairStock Score is 45/100, and the computed Lynch category is none because of losses in each of the last four years. A software business can have a moat, but the financials do not yet prove durable profitability. At a $37.3B market cap, the price already discounts a lot of future success. I would call this a promising growth story, not a value bargain.

In plain English: Zscaler sells cloud security software that helps companies connect workers, apps, and devices safely. The business is growing quickly, but it has not yet become consistently profitable and has lost money in each of the last four years. At $228.66 a share, the price looks expensive compared with those losses and its accounting value, even though it generates positive cash flow.

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Data as of 2026-10-13 close · note generated 2026-10-15 · model deepseek-flash

Sources (SEC EDGAR): fiscal Q3 2026 10-Q (period ended 2026-04-30) · fiscal Q2 2026 10-Q (period ended 2026-01-31) · fiscal Q1 2026 10-Q (period ended 2025-10-31) · fiscal Q3 2025 10-Q (period ended 2025-04-30) · FY2026 10-K (period ended 2026-07-31) · FY2025 10-K (period ended 2025-07-31) · FY2024 10-K (period ended 2024-07-31)

Fundamentals from company filings and market-data providers; prices are end-of-day, not real-time. AI-generated analysis is general and educational — not personal investment advice. Scoring methodology · Score test · Disclaimer