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ZYBERNO

Stock Report

Updated Aug 29, 2026

ZSCALER, INC. (ZS)

Technology • NASDAQ

$182.98

Zscaler Inc. is an American cloud security company headquartered in San Jose, California, that provides internet security, web security, firewalls, sandboxing, SSL inspection, antivirus, and vulnerability management. The company's cloud-native Zero Trust Exchange platform secures users, workloads, IoT/OT devices, and B2B partners with approximately 500 trillion daily signals processed, serving over 8,000 enterprise customers across 185 countries.

Professional Investment Analysis

ZYBERNO SCORE →

Is it a great business? Is it getting better?

52.0/100

AVERAGE BUSINESS

ZSCALER, INC. (ZS) scores 52/100 — decent metrics but limited evidence of durable competitive advantage.

📊 How is the Zyberno Score calculated? +

The Zyberno Score answers one question: "Is this a quality business worth owning?" It's a 0-100 investment grade that evaluates business fundamentals across four critical dimensions, based on principles from Warren Buffett, Benjamin Graham, Peter Lynch, and Charlie Munger.

The 4 Core Categories (25 points each):

1. PROFITABILITY (25 pts)

Metrics: ROE, ROIC, Net Margin, Operating Margin
Thresholds: ROE >20% excellent • ROIC >20% excellent • Net Margin >20% excellent • Operating Margin >25% excellent

2. FINANCIAL STRENGTH (25 pts)

Metrics: Debt-to-Equity, Current Ratio, Interest Coverage, Altman Z-Score
Thresholds: D/E <0.3 excellent • Current Ratio >2.5 excellent • Interest Coverage >10x excellent • Altman Z >3.0 safe

3. CASH FLOW QUALITY (25 pts)

Metrics: Free Cash Flow, OCF vs Net Income, FCF Margin
Thresholds: Positive & growing FCF excellent • OCF/NI >1.2x excellent (cash earnings exceed accounting)

4. GROWTH & CONSISTENCY (25 pts)

Metrics: Revenue Growth, Net Income Growth, FCF Growth, Piotroski F-Score
Thresholds: Growth via log-linear regression • Piotroski 8-9 excellent, 6-7 good

Score Interpretation:

75-100

GREAT BUSINESS

65-74

GOOD BUSINESS

50-64

AVERAGE BUSINESS

30-49

WEAK BUSINESS

0-29

POOR BUSINESS

→ View full ZS quality analysis & detailed breakdown

VALUATION SIGNAL

MARGIN OF SAFETY

Is this stock cheap or expensive relative to what the business has historically generated for owners?

+11.5%

Undervalued

Growth gap unavailable — insufficient data for reverse DCF calculation.

🎯 Expected Annual Return →

23.0%

Margin of Safety convergence — your return if the market re-prices to intrinsic value (5-yr annualised)

13.2%

Yield + growth — what the business alone earns you, even if the market never re-rates

💰 How is Margin of Safety calculated? +

Margin of Safety measures how much discount or premium you're paying relative to a stock's intrinsic value. It's Benjamin Graham's core principle: the larger the margin, the lower your downside risk.

Formula: (Intrinsic Value − Current Price) ÷ Intrinsic Value × 100%

How We Calculate Intrinsic Value (DCF Method):

Step 1: Calculate current Owner Earnings (OCF − Maintenance CapEx)

Step 2: Calculate company-specific growth rate using log-linear regression on 16 quarters of Owner Earnings

Step 3: Project 10 years forward using the calculated growth rate

Step 4: Discount each year's cash flow to present value using 10% discount rate

Step 5: Calculate terminal value using 3% perpetual growth rate

Step 6: Sum all discounted cash flows = Intrinsic Value

What The Percentages Mean:

+50% or more

EXCELLENT — Very undervalued

+25% to +50%

GOOD — Attractive discount

0% to +25%

FAIR — Reasonable value

0% to -25%

CAUTION — Slight premium

-25% or worse

POOR — Overvalued

"Price is what you pay, value is what you get." — Warren Buffett

→ View full ZS valuation analysis · → View full ZS Brina Gap analysis

📈 How is Brina Gap calculated? +

Brina Gap measures the difference between the growth a business can fundamentally sustain and the growth the market is already pricing in.

Formula: Fundamental Growth Rate − Market-Implied Growth Rate

The Two Components:

Fundamental Growth Rate = ROIC × Reinvestment Rate

What the business can sustainably grow at based on how much it reinvests and what return it earns on that capital. Grounded in historical financials.

Market-Implied Growth Rate = Reverse DCF

The growth rate the current Enterprise Value implicitly assumes. Calculated by back-solving a 10-year DCF model (10% WACC, 3% terminal growth) until the present value of projected cash flows equals EV.

What The Gap Means:

Gap > +5% Market Underestimates — potential upside

+2% to +5% Slight Underestimate

-2% to +2% Fairly Priced — market consensus matches fundamentals

-5% to -2% Slight Overestimate

Gap < -5% Market Overestimates — price embeds optimism fundamentals don't support

A positive gap (market underestimates) combined with a positive Margin of Safety is the strongest combined signal — the business is both cheap historically and forward economics are stronger than the price suggests.

Critical Financial Health Indicators

Return on Equity (Profitability):CRITICAL (-3.7%)

Debt-to-Equity (Solvency Risk):EXCELLENT (0.07x)

Operating Margin (Operational Efficiency):CRITICAL (-4.7%)

Return on Capital (Capital Efficiency):CRITICAL (-7.3%)

📊 Valuation Trilogy

Three interconnected metrics for complete valuation analysis

Click any metric for full methodology and detailed analysis

Zyberno's Verdict

ZSCALER, INC. (ZS) stock report — Zyberno Score 52/100 (AVERAGE BUSINESS), Margin of Safety +11.5%, 23% expected annual return. Full financial analysis on Zyberno.

According to Zyberno's DCF model, ZSCALER, INC. (ZS) trades at $182.98 against an estimated intrinsic value per share of $206.79 — a +11.5% Margin of Safety based on Owner Earnings of $1.07B TTM, projected at 100.0% growth for 10 years with a 2.5% terminal growth rate. Zyberno's model translates this into a 5-year expected return of 23.0% annually.

Over the trailing twelve months, ZS generated $1.07B in Owner Earnings. Capital was deployed as follows: $164.54M invested in capital expenditures. Reinvestment rate: -131.8%. Owner Earnings have grown at 100.0% annually over the trailing five years using log-linear regression.

DIVISION I: EXECUTIVE SUMMARY

A. Market Valuation

Market Price & Capitalization (2)

Current Price:182.98

Market Cap:$29.41B

Valuation Multiples (3)

P/B Ratio:12.43x

P/S Ratio:9.27x

Peg Ratio:-999.00x

Enterprise Metrics (2)

Enterprise Value:$28.59B

Pfcf Ratio:31.80x

Price Action & Momentum (3)

12-1 Momentum:

-50.2% (7th pctile)

📈 Click to view full ZS Momentum analysis →

Momentum Percentile:7 / 100

% of 52-Week High:54.3%

B. Profitability Assessment

Return Metrics (5)

ROE:

-3.7%

📊 Click to view full ZS ROE analysis →

ROA:-1.2%

Roic:

-7.3%

📊 Click to view full ZS ROIC analysis →

Reinvestment Rate:-131.8%

Fundamental Growth Rate (g):9.6%

Margin Analysis (3)

Operating Margin Ttm:-4.7%

Net Margin Ttm:-2.4%

Ebitda Margin:-3.6%

TTM Performance (3)

Gross Margin Ttm:76.7%

Operating Margin Ttm:-4.7%

Net Margin Ttm:-2.4%

Yield Metrics (3)

Earnings Yield:-$0.26

Owner Earnings Yield:$3.63

Dividend Yield:0.0%

C. Log-Linear Regression Growth Trends

Earnings Surprise (SUE) (3)

Earnings Surprise (SUE):

-0.13

📊 Click to view full ZS Earnings Surprise analysis →

EPS Surprise vs Expected:-58.2%

Latest Earnings Filed:2026-05-26

Revenue Growth (Linear) (1)

Revenue Growth Rate (Linear):33.6%

Cash Flow Growth (Linear) (2)

Free Cash Flow Growth Rate (Linear):93.4%

Operating Cash Flow Growth Rate (Linear):70.1%

D. Financial Stability

Liquidity Ratios (3)

Current Ratio:1.86x

Quick Ratio:1.86x

Cash Ratio:0.39x

Leverage Analysis (3)

Debt To Equity Ttm:0.07x

Debt-to-Equity Ratio:0.07x

Debt To Ebitda:-999.00x

Coverage Ratios (2)

Interest Coverage Ratio:-11.55x

Times Interest Earned:-11.55

Capital Structure (4)

Working Capital:2,153,243,000.00

Cash And Cash Equivalents:982,112,000.00

Long Term Debt:$94.80M

Net Debt:-$820.56M

DIVISION II: FINANCIAL STATEMENTS ANALYSIS

A. Income Statement Analysis

Revenue Components (2)

Revenue TTM: $3.17B

Linear Growth: 33.6%

📊 Click to view full ZS Revenue analysis & methodology →

Cost Of Revenue Ttm:$740.91M

Profitability Breakdown (2)

Gross profit TTM: $2.43B

Linear Growth: 33.2%

📊 Click to view full ZS Gross Profit analysis & methodology →

-$150.02M

Bottom Line Performance (3)

-$77.39M

Income Before Tax:-$33.95M

Ebitda Ttm:-114,804,000.00

Operating Expenses (5)

Operating Expenses:2,582,676,000.00

R And D Expense:839,522,000.00

Sga Expense:1,445,043,000.00

Income Tax Expense:$43.44M

Interest Expense:11,122,000.00

Expense Ratios (3)

R And D To Revenue Percentage:98.7%

Sga To Revenue Percentage:169.9%

Ebitda Margin:-3.6%

B. Balance Sheet Analysis

Asset Composition (5)

Total Assets:$7.10B

Current Assets:$4.65B

Ppe Net:574,737,000.00

Goodwill:1,094,434,000.00

Intangible Assets:$191.74M

Liability Structure (4)

Total Liabilities:4,731,484,000.00

Current Liabilities:2,500,942,000.00

Long Term Debt:$94.80M

Short Term Debt:$66.75M

Equity & Capital (3)

Equity:$2.37B

Retained Earnings:-$1.25B

Common Stock:1,000,000,000.00

Working Capital Items (3)

Accounts Receivable:730,461,000.00

Inventory:0.00

Accounts Payable:33,874,000.00

Special Items (2)

Contract Liabilities:2,477,200,000.00

Stock Based Compensation:205,186,000.00

C. Cash Flow Analysis

Operating Activities (2)

Operating cash flow TTM: $1.09B

Linear Growth: 70.1%

Free cash flow TTM: $924.86M

Linear Growth: 93.4%

📊 Click to view full ZS Free Cash Flow analysis & methodology →

Investment Activities (2)

Investing Cash Flow:-$1.50B

Capital Expenditures Ttm:164,538,000.00

Financing Activities (3)

Financing Cash Flow:$3.10M

Dividends Paid Ttm:0.00

Stock Repurchase:0.00

Capital Transactions (3)

Common Stock Issuance:0.00

Long Term Debt Issuance:$0.00

Long Term Debt Repayments:$0.00

Non-Cash Items (1)

Depreciation Amortization Ttm:35,213,000.00

DIVISION III: OPERATIONAL METRICS

A. Per Share Analysis

Earnings Per Share (3)

EPS (Basic TTM):-0.48

-$0.48

Earnings Per Share Ttm:-$0.48

Revenue & Cash Per Share (3)

Sales Per Share Ttm:19.74

Operating Cash Flow Per Share:$6.05

Fcf Per Share Ttm:5.75

Book Value & Capital (2)

Book Value Per Share:$14.72

Cash Per Share:6.11

Dividend Policy (1)

Dividend Payout Ratio:-999.00x

B. Operational Efficiency

Asset Utilization (2)

Asset Turnover Ttm:0.47x

Working Capital Turnover Ttm:1.47x

Receivables Management (2)

Receivables Turnover Ttm:4.34x

Days Sales Outstanding Ttm:84.01

Inventory Management (2)

Inventory Turnover Ttm:-999.00x

Days Inventory Outstanding Ttm:-999.00

Payables & Cash Cycle (2)

Days Payable Outstanding:16.69

Cash Conversion Cycle:-931.68

C. Quality & Risk Metrics

Financial Quality Scores (2)

Financial Strength Score:100.00

Quality Score:55.00

Market Metrics (2)

Beta:0.00x

Volatility Category:unknown

DIVISION IV: INVESTMENT ANALYSIS

A. Value Investment Framework

Owner Earnings Analysis (3)

Owner earnings TTM: $1.07B

Linear Growth: 100.0%

📊 Click to view full ZS Owner Earnings analysis & methodology →

Owner Earnings Per Share:$6.65

Owner Earnings Yield:$3.63

Growth Assessment (1)

Owner Earnings Growth Rate:$100.00

Damodaran Growth Analysis (2)

Reinvestment Rate:-131.8%

Fundamental Growth Rate (g):9.6%

Intrinsic Value Models (1)

Intrinsic Value:

$33.24B

📊 Click to view full ZS DCF valuation →

Margin of Safety (1)

Margin Of Safety:

11.5%

📊 Click to view full ZS valuation analysis →

Return Scenarios (2)

Theoretical 5-Year Return:

23.0%

📊 Click to view full ZS expected return analysis →

Forward Expected Return (Yield + Growth):

13.2%

📊 Click to view full ZS expected return analysis →

Investment Assessment (1)

Buffett Assessment:Fair value

B. Log-Linear Regression Growth Analysis

Growth Rates (Log-Linear Regression) (1)

Revenue Growth Rate (Linear):33.6%

Cash Flow Growth Rates (2)

Free Cash Flow Growth Rate (Linear):93.4%

Operating Cash Flow Growth Rate (Linear):70.1%

Other Growth Rates (3)

Gross Profit Growth Rate (Linear):33.2%

Book Value Growth Rate (Linear):42.6%

Owner Earnings Growth Rate:$100.00

C. Company Profile & Context

Corporate Information (6)

Symbol:ZS

Company Name:ZSCALER, INC.

Sector:Technology

Industry:Software Development

Exchange:NASDAQ

Country:United States

Market Classification (3)

Market Cap Category:N/A

Price Category:high

Volume Category:N/A

Share Structure (3)

Shares Outstanding:160.74M

Shares Outstanding Basic:160.74M

Shares Outstanding Diluted:160.74M

Data Processing Info (3)

Processing Version:v3.0

Last Updated:2026-08-29 01:24:23 UTC

Data Timestamp:2026-08-29T01:24:23.784826