Okta Inc. Class A Common Stock (OKTA)

FairStock Score: 38/100 — MIXED

Key Financials

Strengths

• Generates $836 million in annual free cash flow (6.3% yield on market cap)
• Conservative balance sheet with debt-to-equity of just 0.06, providing financial flexibility

Concerns

• Trades significantly above Graham Number ($34) with negative 120% margin of safety—limited downside protection

AI Analysis

Okta Inc. Class A Common Stock is a mid-cap technology company valued at $13.2 billion. The business generates $2.9 billion in annual revenue with a 2.2% net margin and $836 million in free cash flow. From a quality standpoint, Okta shows solid Piotroski F-Score of 6/9 and Altman Z-Score of 2.8 in the grey zone. On valuation, the stock is commanding a steep 58.0x multiple, with trades far above its Graham Number ($34) with no margin of safety. Growth dynamics show revenue growing at 11.6% and profit growth of 173.9%. Our composite FairStock Score of 38/100 reflects below-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Improving fundamentals and sector tailwinds could drive meaningful earnings growth, compressing the effective multiple for patient investors. With $836 million in annual free cash flow (6.3% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 58x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer