Zscaler (NASDAQ:ZS – Get Free Report) and Tyler Technologies (NYSE:TYL – Get Free Report) are both large-cap technology companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, profitability, dividends, earnings and analyst recommendations.
Risk & Volatility
Zscaler has a beta of 0.82, indicating that its stock price is 18% less volatile than the S&P 500. Comparatively, Tyler Technologies has a beta of 0.74, indicating that its stock price is 26% less volatile than the S&P 500.
Insider & Institutional Ownership
46.5% of Zscaler shares are held by institutional investors. Comparatively, 93.3% of Tyler Technologies shares are held by institutional investors. 17.2% of Zscaler shares are held by insiders. Comparatively, 1.1% of Tyler Technologies shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Profitability
This table compares Zscaler and Tyler Technologies’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Zscaler | -1.88% | 1.23% | 0.40% |
| Tyler Technologies | 13.51% | 12.21% | 7.30% |
Analyst Ratings
This is a summary of recent recommendations and price targets for Zscaler and Tyler Technologies, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Zscaler | 1 | 8 | 36 | 0 | 2.78 |
| Tyler Technologies | 0 | 4 | 11 | 1 | 2.81 |
Zscaler currently has a consensus price target of $236.65, suggesting a potential upside of 19.73%. Tyler Technologies has a consensus price target of $440.88, suggesting a potential upside of 4.89%. Given Zscaler’s higher possible upside, equities analysts plainly believe Zscaler is more favorable than Tyler Technologies.
Earnings and Valuation
This table compares Zscaler and Tyler Technologies”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Zscaler | $3.35 billion | 9.61 | -$63.18 million | ($0.39) | -506.82 |
| Tyler Technologies | $2.33 billion | 7.17 | $315.60 million | $7.94 | 52.94 |
Tyler Technologies has lower revenue, but higher earnings than Zscaler. Zscaler is trading at a lower price-to-earnings ratio than Tyler Technologies, indicating that it is currently the more affordable of the two stocks.
Summary
Tyler Technologies beats Zscaler on 9 of the 15 factors compared between the two stocks.
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.
About Tyler Technologies
Tyler Technologies, Inc. provides integrated information management solutions and services for the public sector. It operates in two segments, Enterprise Software and Platform Technologies. The company offers platform and transformative technology solutions, including cybersecurity for government agencies; data and insights solutions; digital solutions that helps workers and policymakers to share, communicate, and leverage data; payments solutions, such as billing, presentment, merchant onboarding, collections, reconciliation, and disbursements; platform technologies, an application development platform that enables government workers to build solutions and applications; and outdoor recreation solutions, including campsite reservations, activity registrations, licensing sales and renewals, and real-time data for conservation and park management. It also provides public administration solutions, such as civic services; financial applications with human resources, revenue management, tax billing, utilities, asset management, and payment processing; property and recording service that manages appraisal services, valuation, tax billing and collections, assessment administration, and land and official records; and permitting, licensing, and regulatory management solutions. In addition, the company offers courts and public safety solutions; school ERP and student transportation solutions for K-12 schools; and health and human services solutions. Further, the company offers software as a service arrangements and electronic document filing solutions for courts; software and hardware installation, data conversion, training, product modification, and maintenance and support services; and property appraisal outsourcing services for taxing jurisdictions. Tyler Technologies, Inc. has a strategic collaboration agreement with Amazon Web Services for cloud hosting services. The company was founded in 1966 and is headquartered in Plano, Texas.
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