Contrasting Okta (NASDAQ:OKTA) and Palo Alto Networks (NASDAQ:PANW)

Okta (NASDAQ:OKTA) and Palo Alto Networks (NASDAQ:PANW) are both large-cap computer and technology companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, profitability, dividends, risk, valuation, earnings and institutional ownership.

Risk and Volatility

Okta has a beta of 0.82, meaning that its stock price is 18% less volatile than the S&P 500. Comparatively, Palo Alto Networks has a beta of 0.97, meaning that its stock price is 3% less volatile than the S&P 500.

Profitability

This table compares Okta and Palo Alto Networks’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Okta	4.85%	2.79%	1.92%
Palo Alto Networks	13.95%	19.48%	5.77%

Institutional & Insider Ownership

86.6% of Okta shares are held by institutional investors. Comparatively, 79.8% of Palo Alto Networks shares are held by institutional investors. 5.7% of Okta shares are held by company insiders. Comparatively, 2.5% of Palo Alto Networks shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Okta and Palo Alto Networks”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Okta	$2.61 billion	6.11	$28.00 million	$0.63	144.60
Palo Alto Networks	$8.03 billion	15.97	$2.58 billion	$1.75	109.86

Palo Alto Networks has higher revenue and earnings than Okta. Palo Alto Networks is trading at a lower price-to-earnings ratio than Okta, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Okta and Palo Alto Networks, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Okta	3	14	20	0	2.46
Palo Alto Networks	2	13	27	0	2.60

Okta presently has a consensus target price of $119.44, suggesting a potential upside of 31.11%. Palo Alto Networks has a consensus target price of $208.00, suggesting a potential upside of 8.19%. Given Okta’s higher probable upside, analysts clearly believe Okta is more favorable than Palo Alto Networks.

Summary

Palo Alto Networks beats Okta on 10 of the 14 factors compared between the two stocks.

About Okta

Okta, Inc. operates as an identity partner in the United States and internationally. The company offers Okta's suite of products and services used to manage and secure identities, such as Single Sign-On that enables users to access applications in the cloud or on-premises from various devices; Adaptive Multi-Factor Authentication provides a layer of security for cloud, mobile, web applications, and data; API Access Management enables organizations to secure APIs; Access Gateway enables organizations to extend Workforce Identity Cloud; and Okta Device Access enables end users to securely log in to devices with Okta credentials. It also provides Universal Directory, a cloud-based system of record to store and secure user, application, and device profiles for an organization; Lifecycle Management enables IT organizations or developers to manage a user's identity throughout its lifecycle; Okta Identity Governance provides identity access management and identity governance solutions; Advanced Server Access offers access management to secure cloud infrastructure; Okta Privileged Access enables organizations to reduce risk with unified access and governance management for on-premises and cloud resources; and Okta Workforce Identity Workflows. In addition, the company offers Universal Login, which allows customers to provide login experience across different applications and devices; and Attack Protection, a suite of security capabilities that protects customers from different types of malicious traffic. Further, it provides Adaptive Multi-Factor Authentication, Passwordless, Machine to Machine, Private Cloud, Organizations, Actions and Extensibility, and Enterprise Connections. The company sells its products directly to customers through sales force and channel partners. The company was formerly known as Saasure, Inc. Okta, Inc. was incorporated in 2009 and is headquartered in San Francisco, California.

About Palo Alto Networks

Palo Alto Networks, Inc. provides cybersecurity solutions worldwide. The company offers firewall appliances and software; and Panorama, a security management solution for the global control of network security platform as a virtual or a physical appliance. It also provides subscription services covering the areas of threat prevention, malware and persistent threat, URL filtering, laptop and mobile device protection, DNS security, Internet of Things security, SaaS security API, and SaaS security inline, as well as threat intelligence, and data loss prevention. In addition, the company offers cloud security, secure access, security operations, and threat intelligence and security consulting; professional services, including architecture design and planning, implementation, configuration, and firewall migration; education services, such as certifications, as well as online and in-classroom training; and support services. It sells its products and services through its channel partners, as well as directly to medium to large enterprises, service providers, and government entities operating in various industries, including education, energy, financial services, government entities, healthcare, Internet and media, manufacturing, public sector, and telecommunications. Palo Alto Networks, Inc. was incorporated in 2005 and is headquartered in Santa Clara, California.