Cato vs Zscaler Which Should You Buy?

Cato Networks and Zscaler are two leading companies in the cybersecurity and networking industry. Cato focuses on secure access service edge (SASE) solutions, offering cloud-based services that enhance network security and performance. On the other hand, Zscaler provides cloud security services, focusing on secure internet access and digital transformation. Both companies have experienced significant growth in recent years, attracting the attention of investors. In this comparison, we will analyze the stock performance and potential of Cato Networks and Zscaler to help investors make informed decisions.

Cato or Zscaler?

When comparing Cato and Zscaler, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Cato and Zscaler.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Cato has a dividend yield of 14.0%, while Zscaler has a dividend yield of -%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Cato reports a 5-year dividend growth of -12.42% year and a payout ratio of -81.98%. On the other hand, Zscaler reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Cato P/E ratio at -6.86 and Zscaler's P/E ratio at -523.86. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Cato P/B ratio is 0.60 while Zscaler's P/B ratio is 23.73.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Cato has seen a 5-year revenue growth of 0.06%, while Zscaler's is 2.75%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Cato's ROE at -8.55% and Zscaler's ROE at -5.58%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $6.06 for Cato and $195.05 for Zscaler. Over the past year, Cato's prices ranged from $4.27 to $7.80, with a yearly change of 82.67%. Zscaler's prices fluctuated between $153.45 and $259.61, with a yearly change of 69.18%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.