Zscaler, Inc. (ZS) Stock — Forensic Analysis, Red Flags & Rating | Stockonomy · Stockonomy
Forensic Analysis · Technology / Software · as of Jun 27, 2026
Zscaler, Inc. (ZS)
A forensic read on Zscaler, Inc. built from its complete SEC filings — financial-health screens, earnings quality, red flags and a price-aware rating. Reproducible math, not opinion.
C · Mixed — selective
Forensic grade
Grey Zone
Financial health
2.2
Altman Z-score
Clean
Earnings quality
5
Forensic signals
-3.7%
ROE
$21.4B
Market cap
Zscaler, Inc. earns a C (Mixed — selective) forensic quality grade, and its Altman Z-score is 2.2, placing it in the Grey zone. 5 forensic signals were flagged in its latest SEC filings, led by return on invested capital.
What the filings flag
-6%Return on invested capital.Return on invested capital is -6% and rising from -38% — well below its ~10% cost of capital, so reinvested dollars may be destroying value, not building it.
+3.2%/yrShare-count dilution.Diluted share count changed +10% over the last 3 years to FY2025 (+3.2%/yr). The count is GROWING — existing holders are being diluted. That's ~3.2% shaved off per-share growth every year — total profit has to grow that much just to keep earnings-per-share flat, and a stake held since FY2022 has been diluted ~10%.
25% of revStock-based comp load.Stock-based compensation ran 25% of revenue and 82% of free cash flow in FY2025 — about $4.28 per diluted share. Heavy — a large slice of 'free cash flow' is really being paid out in stock, so the true owner cash per share is well below the headline.
stoppedShareholder returns — halted.Capital returns have STOPPED — $22,000 of buybacks + dividends in FY2019, but ~$0 in FY2021. A halt usually means the company is conserving cash; understand why before reading it as neutral.
135d DSOReceivables vs revenue.Days sales outstanding moved from 124 to 135 days FY2024→FY2025 (receivables +35% vs revenue +23%). Receivables are creeping up relative to sales — watch the trend.
Key fundamentals
Net Margin-1.6%
Debt / Equity0.63x
Free Cash Flow$808.2M
Latest Revenue$2.67B
Return on Equity-2.3%
Revenue Growth YoY+23.3%
Go deeper — free with an account
The forensic grade and screens above are free — no account needed. An account adds the full interactive deep-dive on Zscaler, Inc.:
🔒The written investment read — what the numbers mean, in plain English
🔒Ask anything about ZS's filings — AI Q&A across the 10-K, 10-Qs & 8-Ks
🔒Interactive valuation — reverse-DCF sliders, Monte Carlo & scenario stress
🔒Calibrated 12-month price forecast, with the math shown