Zscaler Outperforms F5: A Compelling Investment Choice

The analysis reveals that Zscaler's robust revenue growth and improved earnings make it a more attractive investment compared to F5, despite the recent stock price drop. The report highlights key financial metrics that could impact stock valuations.

Date: 07-12-2024

AI Rating: 7

Earnings Per Share (EPS): Zscaler reported adjusted earnings of $0.77 per share, surpassing consensus estimates of $0.63, indicating a positive performance in earnings.

Revenue Growth: Zscaler's revenue growth rate of 48.1% over the past few years is significantly higher than F5’s growth rate of 2.7%. Zscaler's revenue of $628 million also exceeded the $606 million consensus estimate, which is a positive sign for investors.

Net Income: Over the last twelve months, F5’s net income margin is at 28.2%, compared to Zscaler’s 22.9%, highlighting that while F5 is more profitable, Zscaler has improved its margin from 11.2% to 23.4%.

Profit Margins: While Zscaler shows a lower net income margin compared to F5, it has demonstrated significant improvement in its profit margin over time, which is a positive indication of financial health.

Free Cash Flow (FCF): The report does not provide information regarding Free Cash Flow, so this area remains unassessed.

Return on Equity (ROE): The report does not contain any details regarding Return on Equity, and thus this area cannot be analyzed.

In summary, the report clearly indicates that Zscaler's recent performance in both revenue and earnings improvements could positively affect investor sentiment despite its recent stock price decline of 8%, driven by profit-taking after prior gains. The analysis of revenue growth favors Zscaler, making it appear as a compelling investment choice compared to F5, despite F5’s superior profitability metrics. Investors might predict an upward adjustment in Zscaler's stock price as they recognize its potential for continued growth.

Stocks: ZS FFIV