Zscaler Inc (ZS, Financial), a leading player in the software industry, has seen a significant surge in its stock price over the past three months. The company's market cap stands at $24.72 billion, with its stock price currently at $167.95. Over the past week, the stock has gained 4.25%, and over the past three months, it has seen an impressive 11.84% increase. According to GuruFocus.com's GF Value, which calculates a stock's intrinsic value using historical multiples, past performance adjustments, and future business estimates, Zscaler is significantly undervalued. The GF Value stands at $453.83, up from $449.04 three months ago, indicating a potential for further growth.
Unpacking Zscaler Inc's Business Model
Zscaler Inc is a software-as-a-service (SaaS) firm that provides cloud-native cybersecurity solutions primarily to enterprise customers. The company's offerings can be broadly divided into Zscaler Internet Access, which provides secure access to external applications, and Zscaler Private Access, which provides secure access to internal applications. Headquartered in San Jose, California, Zscaler went public in 2018 and has since been a significant player in the software industry. 
Profitability Analysis
According to GuruFocus.com's Profitability Rank, Zscaler scores a 3 out of 10, indicating a need for improvement. The company's Operating Margin stands at -14.04%, which is better than 29.18% of companies in the industry. The ROE is -35.38%, better than 18.74% of companies, while the ROA is -6.52%, better than 34.78% of companies. The ROIC is -13.87%, better than 28.03% of companies. These figures indicate that while Zscaler has room for improvement, it is performing better than a significant portion of its peers. 
Growth Prospects
Zscaler's growth prospects look promising, with a Growth Rank of 8 out of 10. The company's 3-Year Revenue Growth Rate per Share is 49.60%, better than 92.62% of companies, and its 5-Year Revenue Growth Rate per Share is 34.80%, better than 93.01% of companies. The Total Revenue Growth Rate (Future 3Y To 5Y Est) is 26.57%, better than 90.91% of companies, and the EPS without NRI Growth Rate (Future 3Y To 5Y Est) is 44.06%, better than 93.44% of companies. These figures indicate that Zscaler is well-positioned for future growth. 
Top Holders of Zscaler Stock
The top three holders of Zscaler stock are Jim Simons (Trades, Portfolio), who holds 620,700 shares (0.43% of the total), Ron Baron (Trades, Portfolio), who holds 128,952 shares (0.09% of the total), and Ken Fisher (Trades, Portfolio), who holds 12,214 shares (0.01% of the total).
Competitive Landscape
Zscaler operates in a competitive industry, with key competitors including Block Inc (SQ, Financial) with a market cap of $30.69 billion, MongoDB Inc (MDB, Financial) with a market cap of $26.89 billion, and Splunk Inc (SPLK, Financial) with a market cap of $24.74 billion.
Conclusion
In conclusion, Zscaler's stock performance, profitability, and growth prospects make it a compelling option for value investors. Despite some areas for improvement in profitability, the company's strong growth prospects and undervalued status according to the GF Value indicate potential for further gains. However, investors should also consider the competitive landscape and the holdings of top investors when making their investment decisions.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
