Have you been paying attention to shares of Okta (OKTA)? Shares have been on the move with the stock up 28.1% over the past month. The stock hit a new 52-week high of $118.07 in the previous session. Okta has gained 47.7% since the start of the year compared to the -6.1% move for the Zacks Computer and Technology sector and the 7.7% return for the Zacks Security industry.
The stock has a great 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 3, 2025, Okta reported EPS of $0.78 versus consensus estimate of $0.73 while it beat the consensus revenue estimate by 1.97%.
For the current fiscal year, Okta is expected to post earnings of $3.16 per share on $2.86 billion in revenues. This represents a 12.46% change in EPS on a 9.48% change in revenues. For the next fiscal year, the company is expected to earn $3.49 per share on $3.13 billion in revenues. This represents a year-over-year change of 10.25% and 9.48%, 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 these give investors a variety of ways to comb 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 F. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 36.8X current fiscal year EPS estimates, which is not in-line with the peer industry average of 62.9X. On a trailing cash flow basis, the stock currently trades at 66.2X versus its peer group's average of 67.3X. Additionally, the stock has a PEG ratio of 2.51. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
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 meets the list of requirements. Thus, it seems as though Okta shares could have a bit more room to run in the near term.
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This article originally published on Zacks Investment Research (zacks.com).
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