The Z-Score is a shorthand to describe the financial health of a company, and its likelihood of financial distress. It predicted to a 75% accuracy the probability that a company would experience significant financial distress within 2 years of the score flashing 'in the distress zone'.
Z1 is the Z-Score for manufacturing companies and this version is calculated based using last year's financials.
You can read a detailed description of the Altman Score here.
If the Z Score is falling towards 1.8 then it may be a sell signal.