Okta Earnings – Bullish?

by Ian Harvey

August 26, 2019

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Okta earnings will be reported on Wednesday, August 28, 2019. Will this cloud-based security services specialist Okta Inc (NASDAQ: OKTA) maintain its momentum and bullish nature?

The consensus estimate is for a loss of $0.10 per share on revenue of $131.09 million and the Whisper number is ($0.07) per share.

The company's guidance was for a loss of $0.11 to $0.10 per share on revenue of $130.00 million to $131.00 million. Consensus estimates are for year-over-year earnings growth of 33.33% with revenue increasing by 38.59%.

Shares have surged nearly 110% year to date as investors have been impressed with the company's soaring subscription revenue and free cash flow. Investors found plenty of reasons to celebrate the company's last report, as sales jumped past management's forecast and Okta earnings achieved positive free cash flow.

For the last reported quarter, it was expected that Okta earnings would post a loss of $0.21 per share when it actually produced a loss of $0.19, delivering a surprise of +9.52%.

Over the last four quarters, the company has beaten consensus EPS estimates four times.

About Okta…..

Okta isn't exactly a household name, but this cloud-based software security company is quickly becoming a major player in the identity-as-a-service market.

The company's stock price has been on a tear since it went public in 2017. Okta debuted at $17 per share in its IPO, and just two years later, the stock trades at a price exceeding $130 -- that's more than seven times the IPO price!

Companies look to Okta to protect access to their data. Okta's software works as a gatekeeper to allow online users (like customers or employees) access to certain information while restricting access to confidential information. This market has become increasingly important as more companies set up online services for their customers and employees. It's also rapidly becoming a large market that will be worth an estimated $24 billion over the next six years.  

Positive factors…..

"The world's largest organizations are increasingly realizing that identity is essential to their cloud, digital transformation, and security initiatives," said CEO Todd McKinnon in the company's first-quarter earnings release. 

The company has laid out a growth strategy that involves signing up new customers, expanding relationships with existing customers, and growing internationally. So far, the growth strategy appears to be working.

Last Okta earnings report saw 53% growth in customers with annual revenue greater than $100,000. Another eye-popping stat was international revenue growth of 60% in the first quarter.

Also, another part of Okta's growth strategy is what is referred to as a "land and expand" strategy in which the company lands a small sale at a large organization and can grow its revenue at the customer by increasing the scope of services offered.

Analysts’ positive…..

The stock has an average rating of “Buy” with ten analysts having rated the stock with a hold, thirteen have assigned a buy rating and one has assigned a strong buy rating to the company’s stock.

Okta had its price target boosted by SunTrust Banks to $130.00 in a research report sent to investors last Wednesday. They currently have a hold rating on the stock.

As well, Okta was upgraded by equities research analysts at BidaskClub from a “buy” rating to a “strong-buy” rating in a research note issued on Thursday, July 18th.

And, Needham & Company LLC increased their price objective on Okta to $154.00 and gave the stock a “buy” rating in a report on Wednesday, July 17th.

In Conclusion…..

The growth stats paint an optimistic picture for Okta earnings. The company is executing a balanced strategy of adding new customers, growing spending from existing customers, and gaining sales traction internationally. Not only is Okta proving to be effective at sales, but its product is clearly keeping its customers satisfied.

OKTA’s 50-day moving average is $133.26 and its two-hundred day moving average is $107.91. The company has a debt-to-equity ratio of 0.61, a quick ratio of 1.12 and a current ratio of 1.12. Okta Inc has a 1-year low of $41.88 and a 1-year high of $141.85.

What can you do?

If you agree with this scenario that Okta earnings will be positive then you may wish to consider the following options trade…..

 Option trade to consider: Buy the OKTA SEP 20 2019 135.000 CALL at approximately $8.30.

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AS ALWAYS THE DECISION IS YOURS!

An Important Note: That any suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.

It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented. GREED can be the undoing of a nice profit!

If you wish to receive more options trading recommendations similar to this, which will help boost your portfolio strategy, check out the other  memberships available at Stock Options Made Easy.

Other Articles of Interest.....

When To Exit A Trade Based On Earnings?.....

It is also worth considering, when options trading earnings reports – “Do we exit on already existing profits or leave the companies to report their earnings and hope for bigger profit?” 

As most traders realize, there is a 50/50 chance that the company stock price could go either way after reporting earnings – even if the report is good, the stock price could reverse – and if you hold a call option, means depletion of an already good profit if it exists. A similar situation can be found if you hold a put option, and a report is not that sound (and you expect a profit from this) but the stock price can, at times move upwards due to traders bias or other external conditions......READ MORE.....

Another article that may be helpful is "Exiting Earnings!"

Before You Trade Consider This Strategy……

"Trading Capital Management" is a key component of your trading strategy. The strategy, on which we base our trades to achieve maximum profit, and to minimize loss, is contingent on using an equal amount of money for each trade.

……continue reading this article……


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Options traders win because they are successful.


Best of Trading,
Ian Harvey
Director of Stock Options Made Easy

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