Zscaler (ZS) Valuation Check After New Peraton Zero Trust Multicloud Partnership Announcement

Peraton’s new strategic partnership with Zscaler (ZS) focuses on integrating hybrid multicloud infrastructure with cloud native Zero Trust security, targeting mission critical government and enterprise environments.

See our latest analysis for Zscaler.

For Zscaler, the Peraton deal lands during a choppy spell, with a 30 day share price return of minus 22.26 percent but a still solid year to date share price return of 28.14 percent and a resilient 3 year total shareholder return of 105.02 percent. This suggests that momentum has cooled in the short term while the longer term growth story remains intact.

If this kind of security driven growth story interests you, it could be worth exploring other high growth tech and AI names through high growth tech and AI stocks to see what else fits your watchlist.

With shares down sharply from recent highs but still boasting robust multi year returns, is Zscaler now trading at a discount to its long term cloud security potential, or is the market already pricing in the next wave of growth?

Most Popular Narrative: 29.1% Undervalued

With Zscaler last closing at 232.78 dollars versus a narrative fair value of 328.22 dollars, the prevailing view leans toward meaningful upside if its growth thesis plays out.

The transition away from legacy security appliances (firewalls, SD WAN), in favor of unified cloud delivered security architectures, is gaining momentum across key verticals like retail and manufacturing. This is supporting a multi year replacement cycle that will boost platform adoption, revenue, and margins. Strategic platform innovation and programs like Z Flex are driving broader product adoption within existing accounts and enabling larger, multi year deals. This is increasing total contract value and supporting higher future operating margins through scale.

Read the complete narrative.

Curious how double digit growth, rising margins, and a premium future earnings multiple can still point to upside from here? The full narrative unpacks the aggressive revenue ramp, profit inflection, and valuation math behind that fair value call, including the debate between the most bullish and most cautious earnings paths.

Result: Fair Value of $328.22 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising competition from cloud providers and ongoing cybersecurity talent shortages could constrain margins and challenge the long term Zero Trust growth story.

Find out about the key risks to this Zscaler narrative.

Another Lens on Valuation

While the narrative model points to upside, a simple sales multiple tells a tougher story. Zscaler trades at 13.1 times sales, well above the US Software average of 4.8 times, peers at 11.9 times, and even its own fair ratio of 10.8 times. This raises clear valuation risk if growth stumbles.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Zscaler Narrative

If you see the story differently, or prefer to dig into the numbers yourself, you can build a personalized Zscaler thesis in just a few minutes, Do it your way.

A great starting point for your Zscaler research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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