Comparing Zscaler (NASDAQ:ZS) & Varonis Systems (NASDAQ:VRNS)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Varonis Systems	-15.88%	-20.01%	-5.84%
Zscaler	-1.52%	-0.59%	-0.18%

Analyst Recommendations

This is a breakdown of current recommendations for Varonis Systems and Zscaler, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Varonis Systems	0	5	13	1	2.79
Zscaler	0	8	28	1	2.81

Varonis Systems presently has a consensus price target of $55.06, suggesting a potential upside of 9.78%. Zscaler has a consensus price target of $294.03, suggesting a potential downside of 5.75%. Given Varonis Systems’ higher probable upside, research analysts plainly believe Varonis Systems is more favorable than Zscaler.

Insider and Institutional Ownership

95.7% of Varonis Systems shares are owned by institutional investors. Comparatively, 46.5% of Zscaler shares are owned by institutional investors. 2.3% of Varonis Systems shares are owned by insiders. Comparatively, 18.1% of Zscaler shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Risk & Volatility

Varonis Systems has a beta of 0.76, meaning that its share price is 24% less volatile than the S&P 500. Comparatively, Zscaler has a beta of 1.09, meaning that its share price is 9% more volatile than the S&P 500.

Earnings & Valuation

This table compares Varonis Systems and Zscaler”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Varonis Systems	$550.95 million	10.19	-$95.76 million	($0.81)	-61.91
Zscaler	$2.17 billion	22.41	-$57.71 million	($0.26)	-1,199.92

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

Summary

Zscaler beats Varonis Systems on 11 of the 14 factors compared between the two stocks.

About Varonis Systems

Varonis Systems, Inc. provides software products and services that allow enterprises to manage, analyze, alert, and secure enterprise data in North America, Europe, the Middle East, Africa, and internationally. Its software enables enterprises to protect data stored on premises and in the cloud, including sensitive files and emails; confidential personal data belonging to customers, and patients and employees' data; financial records; source code, strategic and product plans; and other intellectual property. It offers DatAdvantage that captures, aggregates, normalizes, and analyzes every data access event for users on Windows and UNIX/Linux servers, storage devices, email systems, intranet servers, cloud applications, and data stores; and DatAlert that profiles users, devices, and their behaviors related to systems and data, detects and alerts on deviations that indicate compromise, and provides a web-based dashboard and investigative interface. It also provides data Classification engine that identifies and tags data based on criteria set in various metadata dimensions, as well as provides business and information technology (IT) personnel with actionable intelligence about data; and DataPrivilege. In addition, the company offers Data Transport Engine, an execution engine that unifies the manipulation of data and metadata, translating business decisions, and instructions into technical commands, such as data migration or archiving; and DatAnswers that provides search functionality for enterprise data. It serves its products to financial services, public, healthcare, industrial, technology, insurance, energy and utilities, consumer and retail, education and construction, and engineering sectors. The company sells its products through a network of distributors and resellers. Varonis Systems, Inc. was incorporated in 2004 and is headquartered in New York, New York.

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.