Shares of Okta (OKTA) have been strong performers lately, with the stock up 24.7% over the past month. The stock hit a new 52-week high of $196.9 in the previous session. Okta has gained 59.6% since the start of the year compared to the 3.2% move for the Zacks Computer and Technology sector and the 14.9% return for the Zacks Internet - Software and Services industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on March 5, 2020, Okta reported EPS of $-0.01 versus consensus estimate of $-0.05 while it beat the consensus revenue estimate by 7.42%.
For the current fiscal year, Okta is expected to post earnings of $-1.65 per share on $776.24 million in revenues. This represents a -12.9% change in EPS on a 32.45% change in revenues. For the next fiscal year, the company is expected to earn $-1.44 per share on $990.25 million in revenues. This represents a year-over-year change of 92.5% and 27.57%, respectively.
Okta may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Okta has a Value Score of D. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of B.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Okta currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Okta fits the bill. Thus, it seems as though Okta shares could have potential in the weeks and months to come.
How Does Okta Stack Up to the Competition?
Shares of Okta have been rising, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also impressive, including ChannelAdvisor (ECOM), Donnelley Financial Solutions (DFIN), and VeriSign (VRSN), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 21% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Okta, even beyond its own solid fundamental situation.
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Okta, Inc. (OKTA) : Free Stock Analysis Report
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