Intelligent identity solutions providers Okta, Inc. (OKTA) and Ping Identity Holding Corp. (PING) offer cloud-based security and on-premise applications in the U.S. and internationally. While OKTA offers Okta Identity Cloud, API Access Management, and Advanced Server Access solutions to enterprises, PING offers single sign-on, multi-factor authentication, and security control applications to various businesses.
Because organizations worldwide are accelerating their adoption of cloud platforms amid widespread digital transformation, their need to monitor soaring cyber threat levels has increased by an order of magnitude. Indeed, the unprecedented adoption of remote working and online shopping activities has made it easier than ever before for cybercriminals to exploit individuals and businesses. Amid this transformational environment, the demand for services provided by cyber security companies is soaring.
However, not all companies in the cybersecurity space have been able to capitalize on this ballooning demand . In fact, OKTA and PING have been struggling to stay afloat while their peers are experiencing impressive growth.
Over the past month, OKTA’s stock has lost 14.9%, while PING’s has declined 12.1%. Also, in terms of year-to-date performance, both OKTA and PING have declined. Let’s find out if either of these stocks is a good pick now.
Last month, OKTA appointed Kendall Collins as Chief Marketing Officer and Steve Rowland as Chief Revenue Officer. The company believes that their business expertise and leadership skills will help deliver seamless customer experiences and raise OKTA’s brand presence in the global market.
Also last month, the company collaborated with Crate and Barrel and NTT DATA to offer a safe, secure and seamless experience for their customers and workforces. This initiative should allow OKTA to invest in platforms that drive business growth and improve overall user experience.
Last month, PING appointed Diane Gherson to the company’s board of directors. Her solid background and leadership skills should allow her to drive positive business change and deliver unique experiences to the company’s customers. PING also recently appointed Peter Burke as the Senior Vice President of Research and Development, to support the company’s expanding product capabilities and help improve digital user experience.
Recent Financial Results
During the fiscal fourth quarter, which ended January 31, 2021, OKTA’s total revenue increased 40% year-over-year to $234.7 million. However, the company generated an operating loss of $54.6 million, compared to a $44.70 million loss for the fourth quarter of fiscal 2020. It reported a net loss of $75.81 million and a loss per share of $0.58 over this period. OKTA’s interest income declined 62.5% year-over-year to $2.15 million.
PING’s total revenue declined 7.3% year-over-year to $63.26 million in the fourth quarter ended December 31, 2020. In fact, the company’s gross profit declined 14.4% year-over-year to $44.8 million over this period. It reported a net loss of $3.40 million and an operating loss of $10.35 million. PING’s loss per share came in at $0.04, compared to earnings per share of $0.03 in the prior year quarter.
Past and Expected Financial Performance
OKTA’s revenue and total assets have increased at CAGRs of 48.2% and 102.2%, respectively, over the past three years. In comparison, PING’s revenue has increased at a CAGR of 12.2% over the past three years, while its total assets grew 8.5% over this period.
OKTA’s revenue is expected to increase by 30.3% in the current year, and 28.7 % next year. However, a consensus EPS estimate represents a 185.7% decline in the current quarter, and a 509.1% decline in its fiscal year 2022.
In comparison, the Street expects PING’s revenue to increase 7.9% in fiscal 2021 and 12.9% in fiscal 2022. But the company’s EPS is estimated to decline 33.3% in the current quarter and 39.4% in fiscal 2021.
OKTA’s trailing-12-month revenue is more than three times PING’s. But PING is more profitable, with a gross profit margin of 80.3% versus OKTA’s 73.9%.
However, both OKTA and PING have negative trailing-12-month ROE and ROA.
In terms of trailing-12-month price/sales, OKTA is currently trading at 34.98x, 367.6% higher than PING, which is currently trading at 7.48x. Also, its trailing-12-month’s ev/sales of 35.34x is 360.8% higher than PING’s 7.67x.
OKTA is also more expensive in terms of trailing-12-month price/cash flow (235.53x vs 82.41x) and trailing-12-month price-to-book (43.35x vs 2.55x).
Both OKTA and PING have an overall D rating, which translates to Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
In terms of Value Grade, OKTA has a D, which is consistent with its higher-than-industry ev/sales ratio. In comparison, PING has a C, which justifies its higher-than-industry p/e ratio.
OKTA has a Quality Grade of C, given its lower-than-industry ebit margin. In comparison, PING has a D grade for Quality, which is consistent with its lower-than-industry levered free cash flow margin.
Also, both OKTA and PING have a C grade for Momentum, which is consistent with their negative price returns year-to-date.
In addition to the grades we’ve highlighted, our POWR Ratings system has also rated both OKTA and PING for Growth, Stability, and Sentiment. Get all OKTA ratings here. Also, Click here to see the additional POWR Ratings for PING.
The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
Both OKTA and PING can be profitable long-term investments due to the growing importance of zero-trust and identity security around the world. However, their weak financials and lower profitability do not make them good investment bets currently.
Our research shows that the odds of success increase if one bets on stocks with an Overall POWR Rating of Buy or Strong Buy. Click here to access the top-rated stocks in the Software – Business industry. Also, one can access all the top-rated stocks in the Software – Security industry here.
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OKTA shares were unchanged in premarket trading Tuesday. Year-to-date, OKTA has declined -10.79%, versus a 8.86% rise in the benchmark S&P 500 index during the same period.
About the Author: Imon Ghosh
Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization. More...
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