SentinelOne (NYSE:S) versus Zscaler (NASDAQ:ZS) Critical Review

SentinelOne (NYSE:S) and Zscaler (NASDAQ:ZS) are both computer and technology companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, risk, profitability, earnings, institutional ownership, valuation and dividends.

Volatility & Risk

SentinelOne has a beta of 0.77, meaning that its stock price is 23% less volatile than the S&P 500. Comparatively, Zscaler has a beta of 1.11, meaning that its stock price is 11% more volatile than the S&P 500.

Insider and Institutional Ownership

90.9% of SentinelOne shares are held by institutional investors. Comparatively, 46.5% of Zscaler shares are held by institutional investors. 4.3% of SentinelOne shares are held by company insiders. Comparatively, 18.1% of Zscaler shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares SentinelOne and Zscaler”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SentinelOne	$821.46 million	7.35	-$288.44 million	($1.32)	-13.76
Zscaler	$2.17 billion	20.53	-$57.71 million	($0.26)	-1,099.26

Zscaler has higher revenue and earnings than SentinelOne. Zscaler is trading at a lower price-to-earnings ratio than SentinelOne, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares SentinelOne and Zscaler’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SentinelOne	-49.36%	-15.95%	-10.89%
Zscaler	-1.52%	-0.59%	-0.18%

Analyst Recommendations

This is a breakdown of recent ratings and target prices for SentinelOne and Zscaler, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SentinelOne	0	10	18	2	2.73
Zscaler	0	8	28	1	2.81

SentinelOne currently has a consensus price target of $24.80, suggesting a potential upside of 36.50%. Zscaler has a consensus price target of $296.82, suggesting a potential upside of 3.85%. Given SentinelOne’s higher probable upside, research analysts plainly believe SentinelOne is more favorable than Zscaler.

Summary

Zscaler beats SentinelOne on 11 of the 15 factors compared between the two stocks.

About SentinelOne

SentinelOne, Inc. operates as a cybersecurity provider in the United States and internationally. Its Singularity Platform delivers an artificial intelligence-powered autonomous threat prevention, detection, and response capabilities across an organization's endpoints, cloud workloads, and identify credentials, which enables seamless and autonomous protection against a spectrum of cyber threats. In addition, it offers endpoint protection, endpoint detection and response, cloud and identity security, attack surface management, mobile endpoint security, xdr power tools, watchtower, and vigilance MDR. The company was formerly known as Sentinel Labs, Inc. and changed its name to SentinelOne, Inc. in March 2021. SentinelOne, Inc. was incorporated in 2013 and is headquartered in Mountain View, California.

About Zscaler

Zscaler, Inc. operates as a cloud security company worldwide. The company offers Zscaler Internet Access solution that provides users, workloads, IoT, and OT devices secure access to externally managed applications, including software-as-a-service (SaaS) applications and internet destinations; and Zscaler Private Access solution, which is designed to provide access to managed applications hosted internally in data centers, and private or public clouds. It also provides Zscaler Digital Experience that measures end-to-end user experience across business applications, as well as provides an easy-to-understand digital experience score for each user, application, and location within an enterprise. In addition, the company offers Posture Control solutions comprising Cloud Security Posture Management that identifies and remediates application misconfigurations in SaaS, infrastructure as a service, and PaaS to reduce risk and ensure compliance with industry and organizational benchmarks; Cloud Infrastructure Entitlement Management that detects and remediates excessive or unused cloud permissions and enforces least privileged access without disrupting productivity; Infrastructure as Code (IaC), which analyzes IaC templates to identify misconfigurations and other security issues prior to deployment to cloud infrastructure; and Vulnerability Scanning and Data Loss Prevention solutions. Its platform modules include Zscaler Central Authority, Zscaler Enforcement Node, and Zscaler Log Servers. The company serves customers in airlines and transportation, conglomerates, consumer goods and retail, financial services, healthcare, manufacturing, media and communications, public sector and education, technology, and telecommunications services industries. The company was formerly known as SafeChannel, Inc., and changed its name to Zscaler, Inc. in August 2008. Zscaler, Inc. was incorporated in 2007 and is headquartered in San Jose, California.