Zscaler, Inc. (ZS) Stock Analysis

Analysis from 10-K filed 2026-09-03. Data as of Q3 2026.

Overall Grade: F (Concerning)

Grade F (Concerning). ROIC -4.2%. FCF margin 25.4%. D/E 0.7x. Source: 10-K filed 2026-09-03.

Metric	Value	Context
ROIC	-4.2%	Below expectations
FCF Margin	25.4%	Strong cash generation
Debt/Equity	0.7x	Moderate leverage

ROIC -4.2% — Bottom 50% of sector peers. FCF margin 25.4% — Top 25%.

Explore Zscaler, Inc.: Earnings History | Filings

Programmatic access: Available via MCP at mcp.metricduck.com. Tools for ZS: get_company_overview, get_filing_index (lens: debt_stress, management_outlook, risk_trajectory), get_filing_changes, get_metric_history, compare_companies, screen_filing_signals.

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Profitability: Zscaler, Inc. earns -4.2% ROIC, Bottom 50% in Technology

ROIC TTM -4.2%, sector median 3.7%, Bottom 50%. DuPont: NOPAT margin -5.0% × asset turnover 0.5x. Gross margin 76.8%. Operating margin -4.0%. Source: 10-K filed 2026-09-03.

Metric	ZS	Rating	Context
Return on Invested Capital (ROIC)	-4.2%	Red flag	Below sector median of 3.7%
Return on Equity (ROE)	-2.9%	Red flag	Moderate equity returns
Gross Margin	76.8%	Excellent	Strong pricing power
Operating Margin	-4.0%	Warning	Moderate operational efficiency

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Cash Flow: Zscaler, Inc. generates $852.4M FCF at 25.4% margin, positive NaN/8 quarters

FCF TTM $852.4M. FCF margin 25.4%, Top 25%. OCF/Net income -17.9x. Positive FCF in NaN/8 trailing quarters. Source: 10-K filed 2026-09-03.

Metric	ZS	Rating	Context
Free Cash Flow Margin	25.4%	Excellent	Excellent cash conversion
Free Cash Flow (TTM)	$852.4M	Good	Positive cash generation
OCF/Net Income	-17.9x	Warning	Potential accrual concerns
FCF Consistency (8Q)	N/A	Warning	Variable cash flow

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Balance Sheet: Zscaler, Inc. at 0.7x leverage, -11.3x interest coverage

Debt/Equity 0.7x. Total debt $1.7B, cash & investments $928.4M. Interest coverage -11.3x. Source: 10-K filed 2026-09-03.

Metric	ZS	Rating	Context
Debt to Equity	0.7x	Good	Moderate leverage
Net Cash Position	$-768.0M	Adequate	Net debt position
Interest Coverage	-11.3x	Warning	Monitor debt obligations

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Valuation: Zscaler, Inc. trades at -505.7x earnings

P/E -505.7x. EV/Sales 9.9x. FCF yield 2.6%. Source: 10-K filed 2026-09-03.

Metric	ZS	Rating	Context
P/E Ratio	-505.7x	Red flag	Reasonable valuation
EV/Sales	9.9x	Adequate	Growth premium priced in
FCF Yield	2.6%	Adequate	Lower cash yield

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Capital Allocation: Zscaler, Inc. returns 0.0% shareholder yield

Total shareholder yield 0.0%. Share count +3.0% YoY. Capital returned $0 TTM. Source: 10-K filed 2026-09-03.

Metric	ZS	Rating	Context
Total Shareholder Yield	0.0%	Warning	Dividend + buyback yield combined
Share Count Change (YoY)	3.0%	Warning	Net dilution from issuance/SBC
Total Capital Returned (TTM)	$0	Adequate	Dividends + buybacks returned to shareholders

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Sector Rankings

Metric	Value	Percentile	vs Median
Return on Invested Capital (ROIC)	-4.2%	Bottom 50%	-1.1x below
Free Cash Flow Margin	25.4%	Top 25%	2.5x above
Gross Margin	76.8%	Top 25%	1.5x above
Operating Margin	-4.0%	Bottom 50%	-0.9x below
Return on Equity (ROE)	-2.9%	Bottom 50%	-0.5x below

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Financial Scorecard

Metric	ZS	Rating	Sector Context
Return on Invested Capital (ROIC)	-4.2%	Red flag	Bottom 50% of sector (median: 3.7%)
Free Cash Flow Margin	25.4%	Excellent	Top 25% of sector (median: 10.3%)
Gross Margin	76.8%	Excellent	Top 25% of sector (median: 50.5%)
Debt to Equity Ratio	65.3%	Good	Moderate leverage
Free Cash Flow Yield	2.6%	Warning	Growth-focused valuation

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Frequently Asked Questions

Q: What is Zscaler, Inc.'s Return on Invested Capital (ROIC)?

Zscaler, Inc. (ZS) has a trailing twelve-month Return on Invested Capital (ROIC) of -4.2%. The 8-quarter median ROIC is -3.9% with a improving trend. Sector median 3.7%. Source: 10-K filed 2026-09-03.

Q: What is Zscaler, Inc.'s Free Cash Flow Margin?

Zscaler, Inc. (ZS) has a free cash flow margin of 25.4%, generating $852.4 million in free cash flow over the trailing twelve months. Source: 10-K filed 2026-09-03.

Q: What is Zscaler, Inc.'s P/E ratio and how does it compare to peers?

Zscaler, Inc. (ZS) trades at a P/E ratio of -505.7x, which is above the sector median of N/A. EV/Sales 9.9x. FCF yield 2.6%. Source: 10-K filed 2026-09-03.

Q: How much debt does Zscaler, Inc. have?

Zscaler, Inc. (ZS) has a debt-to-equity ratio of 0.7x with total debt of $1.7 billion. Interest coverage -11.3x. Net debt $768.0 million. Source: 10-K filed 2026-09-03.

Q: What is Zscaler, Inc.'s revenue and earnings growth?

Zscaler, Inc. (ZS) grew revenue by 25.4% year-over-year. EPS -46.8% YoY. Source: 10-K filed 2026-09-03.

Q: How does Zscaler, Inc. compare to competitors in Technology?

Compared to other companies in Technology, Zscaler, Inc. (ZS) shows: ROIC -4.2%, sector median 3.7% (Bottom 50%). FCF margin 25.4%, sector median 10.3% (Top 25%). Gross margin 76.8%, 26.3pp above sector median. These rankings are based on MetricDuck's analysis of all Technology companies with available SEC filings.

Q: What warning signs should I watch for with Zscaler, Inc.?

No quantitative warning flags fired for Zscaler, Inc. (ZS) on margin trend, FCF trend, ROIC trend, or leverage thresholds. Source: 10-K filed 2026-09-03.

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Data Source: Data sourced from 10-K filed 2026-09-03. TTM metrics as of Q3 2026.

Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.

Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.

This analysis is for informational purposes only and does not constitute investment advice.