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Here's Why Okta (OKTA) Fell More Than Broader Market

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In the latest market close, Okta (OKTA - Free Report) reached $99.45, with a -1.76% movement compared to the previous day. The stock's change was less than the S&P 500's daily loss of 0.95%. Meanwhile, the Dow experienced a drop of 1.09%, and the technology-dominated Nasdaq saw a decrease of 0.84%.

Shares of the cloud identity management company witnessed a loss of 6.02% over the previous month, trailing the performance of the Computer and Technology sector with its gain of 1.67% and the S&P 500's gain of 1.78%.

Analysts and investors alike will be keeping a close eye on the performance of Okta in its upcoming earnings disclosure. It is anticipated that the company will report an EPS of $0.54, marking a 145.45% rise compared to the same quarter of the previous year. Meanwhile, our latest consensus estimate is calling for revenue of $604.33 million, up 16.67% from the prior-year quarter.

Looking at the full year, the Zacks Consensus Estimates suggest analysts are expecting earnings of $2.28 per share and revenue of $2.48 billion. These totals would mark changes of +42.5% and +9.66%, respectively, from last year.

Investors should also take note of any recent adjustments to analyst estimates for Okta. Such recent modifications usually signify the changing landscape of near-term business trends. Therefore, positive revisions in estimates convey analysts' confidence in the company's business performance and profit potential.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, running from #1 (Strong Buy) to #5 (Strong Sell), holds an admirable track record of superior performance, independently audited, with #1 stocks contributing an average annual return of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has remained unchanged. Okta is currently sporting a Zacks Rank of #2 (Buy).

Valuation is also important, so investors should note that Okta has a Forward P/E ratio of 44.48 right now. Its industry sports an average Forward P/E of 27.56, so one might conclude that Okta is trading at a premium comparatively.

We can additionally observe that OKTA currently boasts a PEG ratio of 2.05. Comparable to the widely accepted P/E ratio, the PEG ratio also accounts for the company's projected earnings growth. Internet - Software and Services stocks are, on average, holding a PEG ratio of 1.61 based on yesterday's closing prices.

The Internet - Software and Services industry is part of the Computer and Technology sector. This industry, currently bearing a Zacks Industry Rank of 25, finds itself in the top 10% echelons of all 250+ industries.

The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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