Is Zscaler, Inc. (ZS) A Good Stock To Buy Now?

Is ZS a bully banal to buy? We came crossed a bullish thesis connected Zscaler, Inc. connected Outperforming the Market’s Substack by Simple Investing. In this article, we volition summarize the bulls’ thesis on ZS. Zscaler, Inc.'s share was trading astatine $153.76 as of March 13th. ZS’s forward P/E was 40.32 according to Yahoo Finance.

Zscaler, Inc. operates as a unreality information institution worldwide. ZS reported beardown FY1Q26 results, delivering a broad-based earnings beat contempt a antagonistic marketplace absorption pursuing the announcement. The institution generated gross of $788 million, representing 26% year-over-year maturation and modestly exceeding statement expectations, portion operating income reached $172 cardinal with a 21.8% operating margin. The borderline enlargement reflected disciplined disbursal absorption and standard benefits adjacent arsenic the institution continued investing successful maturation initiatives.

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Earnings per stock came successful astatine $0.96, importantly up of expectations. Annual recurring gross (ARR) accrued 26% twelvemonth implicit twelvemonth to $3.2 billion, driven by beardown request crossed the company’s 3 cardinal maturation pillars, which collectively added $189 cardinal successful quarterly nett caller ARR.

While this fig included the publication from the recently acquired Red Canary, management indicated that integrated ARR maturation would have remained around 22%, accordant with the anterior quarter. Remaining show obligations besides strengthened, with RPO rising 35% twelvemonth implicit twelvemonth to $5.9 cardinal and existent RPO increasing 29%, reinforcing the company’s guardant visibility.

Despite these beardown fundamentals, the banal declined aft the results owed to capitalist concerns astir constricted disclosure connected integrated versus inorganic maturation pursuing the Red Canary acquisition and fears of slowing momentum successful the company’s halfway ZIA and ZPA offerings. However, additional management commentary suggested the marketplace absorption was likely overdone, arsenic Red Canary contributed roughly $89 million in ARR and integration is progressing smoothly with operational synergies emerging across go-to-market and enactment functions.

Looking ahead, Zscaler maintained a cautious guidance attack amid a choky IT spending environment, but inactive raised its FY2026 ARR, revenue, and EPS outlook modestly. With continued request for Zero Trust information and rapidly increasing involvement successful AI information solutions, Zscaler remains well positioned for sustained maturation portion continuing to outperform cardinal ratio benchmarks specified arsenic the Rule of 40.