Zscaler (ZS) Valuation Check After Recent Share Price Pullback

Simply Wall St

Wed, February 18, 2026 at 5:11 PM GMT+9 3 min read

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•                                       StockStory Top Pick 
  

  ZS

  -2.89%

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Zscaler (ZS) has been drawing attention after a sharp pullback, with the stock showing a 19% decline over the past month and 38% over the past 3 months. This has prompted closer scrutiny from investors.

See our latest analysis for Zscaler.

Recent trading has been weak, with a 30 day share price return of 19.34% and a 90 day share price return of 38.30%. The 3 year total shareholder return of 30.59% contrasts with a 19.60% total shareholder loss over the past year, suggesting momentum has faded after earlier gains.

If this pullback has you thinking about where growth in security and infrastructure could show up next, take a look at our screener of 34 AI infrastructure stocks as another set of ideas to research.

With the shares well below recent levels and Zscaler trading at an indicated discount to some valuation estimates, you have to ask: is this a reset that opens a buying window, or is the market already pricing in future growth?

Most Popular Narrative: 10% Undervalued

At a last close of $172.59 versus a narrative fair value of $172.68, Zscaler is framed as modestly undervalued, yet the gap to that target is slim.

Zscaler is revolutionizing cloud security with the industry’s first Security as a Service platform. Their solutions are used by more than 5,000 leading organizations, including 50 of the Fortune 500. Key offerings span Zero Trust Exchange, secure web gateways, zero trust network access, cloud application security broker, and secure access service edge, along with professional services to accelerate digital transformation and security outcomes.

Read the complete narrative.

According to WallStreetWontons, the fair value hangs on how fast revenue compounds, where margins eventually settle, and what kind of premium future earnings might command. Curious which growth path and profitability profile sit beneath that $172.68 figure, and how long the narrative assumes those conditions last? The full narrative lays out those building blocks in plain view.

Result: Fair Value of $172.68 (UNDERVALUED)

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

However, this story could change quickly if competitors win large deals away from Zscaler or if rapid technology shifts make parts of its platform less relevant.

Find out about the key risks to this Zscaler narrative.

Another View: Price Versus Sales Sends a Different Signal

While the narrative and DCF work suggest Zscaler is modestly undervalued, the market is asking a premium price for each dollar of sales. The current P/S of 9.7x is higher than both the peer average of 6.8x and a fair ratio of 9.1x, which points to less room for error if growth or margins disappoint. So is this a mispriced opportunity, or a case of expectations still running hot after the pullback?

Story Continues  

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

NasdaqGS:ZS P/S Ratio as at Feb 2026

Next Steps

With sentiment clearly mixed, you do not have to sit on the fence. Take a closer look at the full picture, including 3 key rewards and 1 important warning sign.

Ready to hunt for your next idea?

If this Zscaler reset has your curiosity going, do not stop here. Use the Simply Wall St screener to line up fresh ideas that fit your style before the crowd does.

Target long term value by scanning a curated list of 56 high quality undervalued stocks that may warrant a closer look on price versus fundamentals.

Prioritize resilience by checking out 80 resilient stocks with low risk scores, focusing on companies with profiles that may better suit a cautious approach.

Spot potential early movers by reviewing a screener containing 24 high quality undiscovered gems that the market might not be paying full attention to yet.

_ 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._

Companies discussed in this article include ZS.

Have feedback on this article? Concerned about the content? Get in touch with us directly._ Alternatively, email editorial-team@simplywallst.com_

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