In the rapidly evolving software infrastructure sector, Zscaler, Inc. (ZS) and Gen Digital Inc. (GEN) stand out as key players driving innovation in cybersecurity. While Zscaler focuses on cloud security solutions for enterprises, Gen Digital specializes in consumer cyber safety services. Both companies address critical security needs but target different markets, making their strategies and growth prospects intriguing to compare. In this article, I will help you determine which company presents a more compelling investment opportunity.
Table of contents
Companies Overview
I will begin the comparison between Zscaler and Gen Digital by providing an overview of these two companies and their main differences.
Zscaler Overview
Zscaler, Inc. operates as a global cloud security company headquartered in San Jose, California. Its mission focuses on providing secure access to externally managed applications and internal data center or cloud-hosted applications through solutions like Zscaler Internet Access and Zscaler Private Access. The company serves a broad range of industries including healthcare, financial services, and technology, positioning itself as a key player in software infrastructure with a market cap of 34.1B USD.
Gen Digital Overview
Gen Digital Inc., based in Tempe, Arizona, delivers consumer cyber safety solutions worldwide, including Norton 360 and LifeLock identity theft protection. Its offerings cover malware protection, VPN services, privacy monitoring, and online reputation management. Founded in 1982, the company focuses on protecting personal digital security across multiple platforms with a market cap of 16.1B USD and operates primarily in the software infrastructure sector.
Key similarities and differences
Both Zscaler and Gen Digital operate in the software infrastructure industry with a focus on cybersecurity, yet their target markets differ: Zscaler primarily serves enterprises with cloud security solutions, while Gen Digital targets individual consumers with cyber safety products. Zscaler’s larger workforce of 7,348 employees contrasts with Gen Digital’s 3,400, reflecting differences in scale and market focus. Both companies are listed on NASDAQ and emphasize digital security but address distinct customer needs within that domain.
Income Statement Comparison
The table below presents a side-by-side comparison of key income statement metrics for Zscaler, Inc. and Gen Digital Inc. for their most recent fiscal year.
| Metric | Zscaler, Inc. (ZS) | Gen Digital Inc. (GEN) |
|---|---|---|
| Market Cap | 34.1B | 16.1B |
| Revenue | 2.67B | 3.94B |
| EBITDA | 112M | 2.03B |
| EBIT | -8.8M | 1.61B |
| Net Income | -41.5M | 643M |
| EPS | -0.27 | 1.04 |
| Fiscal Year | 2025 | 2025 |
Income Statement Interpretations
Zscaler, Inc.
Zscaler demonstrated strong revenue growth, increasing nearly 3x from 2021 to 2025, with gross margins steady around 77%. Despite this, profitability remains negative, though improving, with net losses shrinking and net margin rising from deeply negative levels. The 2025 fiscal year showed 23.3% revenue growth and a 41.7% net margin improvement, signaling ongoing margin recovery despite a slight operating loss.
Gen Digital Inc.
Gen Digital reported consistent revenue growth of 54% over five years, with gross margins above 80%, and a solid positive net margin around 16% in 2025. Operating profitability improved significantly, with EBIT margin at 40.8%. However, annual revenue growth slowed to a moderate 3.55% in the latest year, with net margin growth neutral, reflecting a stable but decelerating profit expansion.
Which one has the stronger fundamentals?
Both companies show favorable income statement evaluations, but Gen Digital’s positive net and EBIT margins, alongside high gross margins and profitability, contrast with Zscaler’s persistent net losses despite fast revenue growth and margin improvement. Gen Digital’s stable profitability and operating income strength suggest comparatively stronger fundamentals, while Zscaler’s rapid growth is tempered by ongoing losses.
Financial Ratios Comparison
The table below compares key financial ratios for Zscaler, Inc. and Gen Digital Inc. based on the most recent full fiscal year data available, providing insights into profitability, liquidity, leverage, and market valuation.
| Ratios | Zscaler, Inc. (ZS) 2025 | Gen Digital Inc. (GEN) 2025 |
|---|---|---|
| ROE | -2.31% | 28.34% |
| ROIC | -3.18% | 7.77% |
| P/E | -1063 | 25.36 |
| P/B | 24.51 | 7.19 |
| Current Ratio | 2.01 | 0.51 |
| Quick Ratio | 2.01 | 0.51 |
| D/E (Debt-to-Equity) | 1.00 | 3.66 |
| Debt-to-Assets | 28.0% | 53.7% |
| Interest Coverage | -13.49 | 2.79 |
| Asset Turnover | 0.42 | 0.25 |
| Fixed Asset Turnover | 4.22 | 36.10 |
| Payout ratio | 0% | 48.68% |
| Dividend yield | 0% | 1.92% |
Interpretation of the Ratios
Zscaler, Inc.
Zscaler shows a mixed ratio profile with a slightly unfavorable overall evaluation. While liquidity ratios like current and quick ratios are favorable, profitability metrics such as net margin, ROE, and ROIC remain negative, indicating potential operational challenges. The company does not pay dividends, reflecting its reinvestment strategy in growth and R&D rather than shareholder payouts.
Gen Digital Inc.
Gen Digital’s ratios also receive a slightly unfavorable global assessment. It reports strong profitability with favorable net margin and ROE, yet faces weaknesses in leverage and liquidity, including a low current ratio and high debt-to-assets. The company pays dividends with a 1.92% yield, suggesting moderate shareholder returns despite some financial constraints.
Which one has the best ratios?
Both companies share a slightly unfavorable overall ratio profile, but Gen Digital presents stronger profitability metrics while Zscaler benefits from better liquidity. Zscaler’s negative returns contrast with Gen Digital’s positive margins and ROE, yet Gen’s higher leverage and weaker liquidity balance the comparison, leaving neither clearly superior based solely on ratios.
Strategic Positioning
This section compares the strategic positioning of Zscaler, Inc. and Gen Digital Inc. in terms of market position, key segments, and exposure to technological disruption:
Zscaler, Inc.
- Leading cloud security provider operating globally in software infrastructure, facing competitive pressure from evolving cybersecurity needs.
- Focuses on cloud security, SaaS, private access, and workload segmentation solutions driving revenue.
- Positioned in cloud security with emphasis on SaaS and data center protection; exposed to rapid tech shifts.
Gen Digital Inc.
- Provides consumer cyber safety solutions worldwide, competing in a crowded cybersecurity and privacy market.
- Key segments include Norton 360, identity theft protection, VPN, and privacy management services.
- Concentrated on consumer cyber safety and privacy tools, moderate risk from evolving cyber threat landscape.
Zscaler, Inc. vs Gen Digital Inc. Positioning
Zscaler pursues a diversified cloud security platform across multiple industries, offering broad enterprise solutions. Gen Digital concentrates on consumer cyber safety and privacy products, focusing on subscriptions and consumer protection services. Both face distinct competitive environments and technology risks.
Which has the best competitive advantage?
Both companies are currently shedding value with ROIC below WACC. However, Zscaler shows a growing ROIC trend, indicating improving profitability, while Gen Digital’s declining ROIC trend suggests weakening competitive advantage.
Stock Comparison
The past year saw contrasting stock movements for Zscaler, Inc. and Gen Digital Inc., with Zscaler experiencing a clear bearish trend and Gen Digital showing a bullish trajectory despite recent slight declines.
Trend Analysis
Zscaler, Inc. exhibited a bearish trend over the past 12 months with a price decline of -9.03%, accompanied by deceleration and high volatility (std deviation 47.11). The stock reached a high of 331.14 and a low of 156.78.
Gen Digital Inc. showed a bullish trend over the same period with a +17.89% price increase but with deceleration and low volatility (std deviation 2.59). The stock price fluctuated between 20.03 and 31.58.
Comparing both, Gen Digital delivered the highest market performance with a positive price change, whereas Zscaler experienced a significant negative trend in the last year.
Target Prices
The current analyst consensus reflects optimistic target prices for both Zscaler, Inc. and Gen Digital Inc.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| Zscaler, Inc. | 360 | 260 | 311.41 |
| Gen Digital Inc. | 32 | 31 | 31.5 |
Analysts expect Zscaler’s shares to rise significantly above the current price of $213.98, while Gen Digital’s target consensus suggests moderate upside from its current $26.10 price. These targets indicate positive market sentiment with room for growth.
Analyst Opinions Comparison
This section compares analysts’ ratings and grades for Zscaler, Inc. and Gen Digital Inc.:
Rating Comparison
ZS Rating
- Rating: C- with a very favorable overall rating status.
- Discounted Cash Flow Score: 4, indicating favorable valuation based on future cash flows.
- ROE Score: 1, reflecting very unfavorable efficiency in generating profit from equity.
- ROA Score: 1, showing very unfavorable asset utilization to generate earnings.
- Debt To Equity Score: 1, indicating very unfavorable financial risk from debt levels.
- Overall Score: 1, classified as very unfavorable overall financial standing.
GEN Rating
- Rating: B with a very favorable overall rating status.
- Discounted Cash Flow Score: 5, showing very favorable valuation based on future cash flows.
- ROE Score: 5, reflecting very favorable efficiency in generating profit from equity.
- ROA Score: 3, indicating moderate effectiveness in asset utilization.
- Debt To Equity Score: 1, also indicating very unfavorable financial risk from debt levels.
- Overall Score: 3, classified as moderate overall financial standing.
Which one is the best rated?
Based strictly on the provided data, Gen Digital Inc. is better rated overall with a higher rating (B vs. C-) and stronger scores in discounted cash flow, return on equity, and return on assets. Both have unfavorable debt-to-equity scores.
Scores Comparison
Here is the comparison of the Altman Z-Score and Piotroski Score for both companies:
ZS Scores
- Altman Z-Score: 4.89, indicating a safe zone with low bankruptcy risk.
- Piotroski Score: 3, classified as very weak financial strength.
GEN Scores
- Altman Z-Score: 1.25, indicating a distress zone with high bankruptcy risk.
- Piotroski Score: 6, showing average financial strength.
Which company has the best scores?
ZS has a much stronger Altman Z-Score, placing it in the safe zone, while GEN is in distress. However, GEN’s Piotroski Score is higher, reflecting better financial strength than ZS. The scores show contrasting strengths for each company.
Grades Comparison
The grades assigned by reputable firms to Zscaler, Inc. and Gen Digital Inc. show the following:
Zscaler, Inc. Grades
The table below summarizes recent grades for Zscaler, Inc. from established grading companies.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Citigroup | Maintain | Buy | 2026-01-13 |
| Keybanc | Maintain | Overweight | 2026-01-12 |
| Piper Sandler | Maintain | Neutral | 2026-01-05 |
| RBC Capital | Maintain | Outperform | 2026-01-05 |
| Mizuho | Upgrade | Outperform | 2025-12-16 |
| Bernstein | Downgrade | Market Perform | 2025-12-01 |
| Citigroup | Maintain | Buy | 2025-12-01 |
| JP Morgan | Maintain | Overweight | 2025-11-26 |
| Baird | Maintain | Outperform | 2025-11-26 |
| BTIG | Maintain | Buy | 2025-11-26 |
Zscaler’s grades predominantly indicate positive sentiment, with multiple “Buy” and “Outperform” ratings and few downgrades, suggesting generally favorable analyst views.
Gen Digital Inc. Grades
The table below presents recent grades for Gen Digital Inc. by recognized grading companies.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| RBC Capital | Maintain | Sector Perform | 2025-11-07 |
| Evercore ISI Group | Maintain | Outperform | 2025-11-07 |
| Morgan Stanley | Maintain | Equal Weight | 2025-09-02 |
| Barclays | Maintain | Equal Weight | 2025-08-08 |
| Wells Fargo | Maintain | Overweight | 2025-08-08 |
| RBC Capital | Maintain | Sector Perform | 2025-08-08 |
| Barclays | Maintain | Equal Weight | 2025-07-14 |
| RBC Capital | Maintain | Sector Perform | 2025-05-07 |
| Morgan Stanley | Maintain | Equal Weight | 2025-04-16 |
| RBC Capital | Maintain | Sector Perform | 2025-01-31 |
Gen Digital’s ratings show a more cautious stance, with many “Sector Perform” and “Equal Weight” grades and fewer “Outperform” and “Overweight” evaluations.
Which company has the best grades?
Zscaler, Inc. holds generally stronger grades with a majority of “Buy” and “Outperform” ratings compared to Gen Digital Inc.’s more neutral “Sector Perform” and “Equal Weight” consensus. This difference may influence investors’ perception of growth and risk profiles.
Strengths and Weaknesses
Below is a comparison table highlighting key strengths and weaknesses of Zscaler, Inc. (ZS) and Gen Digital Inc. (GEN) based on the most recent financial and strategic data.
| Criterion | Zscaler, Inc. (ZS) | Gen Digital Inc. (GEN) |
|---|---|---|
| Diversification | Moderate: Primarily cybersecurity cloud services; single segment revenue ~$2.67B (2025) | Higher: Cyber Safety ~$3.89B plus Legacy products; broader product mix |
| Profitability | Low: Negative net margin (-1.55%), ROIC -3.18%, value destroying but improving ROIC trend | Strong: Positive net margin (16.34%), ROE 28.34%, neutral ROIC, but declining trend |
| Innovation | High: Focus on cloud-native security, growing profitability suggests innovation impact | Moderate: Legacy segment still present; innovation needed to reverse ROIC decline |
| Global presence | Strong: Cloud platform enables wide global reach | Strong: Established brand with broad consumer base worldwide |
| Market Share | Growing in enterprise cloud security market | Large in consumer cybersecurity market |
Key takeaways: Zscaler shows potential with improving profitability and innovation in cloud security but is currently value destructive. Gen Digital delivers solid profitability and diversified revenue but faces challenges with declining capital efficiency and legacy product reliance. Investors should weigh innovation growth against profitability trends and market positioning.
Risk Analysis
Below is a comparative table of key risks for Zscaler, Inc. (ZS) and Gen Digital Inc. (GEN) based on the most recent 2025 data:
| Metric | Zscaler, Inc. (ZS) | Gen Digital Inc. (GEN) |
|---|---|---|
| Market Risk | Moderate beta 1.02; tech sector volatility | Slightly higher beta 1.08; consumer cyber safety demand fluctuations |
| Debt level | Moderate leverage (D/E = 1.0), debt to assets 28% | High leverage (D/E = 3.66), debt to assets 54%, financial strain risk |
| Regulatory Risk | Moderate, privacy and cybersecurity regulations impact | Elevated, global operations with multiple compliance requirements |
| Operational Risk | Moderate, cloud security reliance, execution risks | Moderate, dependency on subscription model and tech innovation |
| Environmental Risk | Low, primarily software-based with limited physical footprint | Low, digital service provider with limited direct environmental impact |
| Geopolitical Risk | Moderate, global customer base but US-based | Higher, global footprint including regions with geopolitical tensions |
Synthesis: Gen Digital faces the most impactful risks due to high debt levels and complex regulatory environments across multiple regions, increasing financial and compliance vulnerabilities. Zscaler’s risks are moderate but include operational challenges in a competitive cloud security market. Both require cautious risk management, with Gen Digital’s financial leverage being a key concern.
Which Stock to Choose?
Zscaler, Inc. (ZS) shows strong revenue growth of 23.31% over the past year and an overall 297% increase since 2021 with favorable gross margins near 77%. However, profitability ratios remain negative, including ROE at -2.31%, and the company is shedding value with a slightly unfavorable moat rating despite growing ROIC. The rating is very favorable at C-, though most financial ratios and scores suggest caution.
Gen Digital Inc. (GEN) reports moderate revenue growth of 3.55% in the last year and 54% since 2021, with a favorable net margin of 16.34% and positive ROE at 28.34%. The company is also shedding value with a very unfavorable moat due to declining ROIC, and faces higher debt levels. Its rating stands at B with mixed financial ratios, reflecting moderate overall stability.
Investors focused on growth may find Zscaler’s strong income growth and improving profitability metrics appealing despite its negative returns on capital, while those prioritizing current profitability and moderate stability might see Gen Digital as more favorable. The differing moat evaluations and financial ratios suggest the choice could depend on an investor’s risk tolerance and investment strategy.
Disclaimer: Investment carries a risk of loss of initial capital. The past performance is not a reliable indicator of future results. Be sure to understand risks before making an investment decision.
Go Further
I encourage you to read the complete analyses of Zscaler, Inc. and Gen Digital Inc. to enhance your investment decisions:
