Financial Comparison: Q2 (NYSE:QTWO) and Okta (NYSE:OKTA)

Q2 (NYSE:QTWO) and Okta (NASDAQ:OKTA) are both computer and technology companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, dividends, profitability, valuation and earnings.

Insider and Institutional Ownership

98.7% of Q2 shares are held by institutional investors. Comparatively, 79.2% of Okta shares are held by institutional investors. 17.9% of Q2 shares are held by insiders. Comparatively, 14.7% of Okta shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Q2 and Okta, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Q2 1 4 11 0 2.63
Okta 0 7 13 0 2.65

Q2 currently has a consensus target price of $70.04, suggesting a potential downside of 6.44%. Okta has a consensus target price of $96.35, suggesting a potential downside of 24.90%. Given Q2’s higher probable upside, analysts plainly believe Q2 is more favorable than Okta.

Volatility and Risk

Q2 has a beta of 1.48, indicating that its stock price is 48% more volatile than the S&P 500. Comparatively, Okta has a beta of 1.08, indicating that its stock price is 8% more volatile than the S&P 500.

Valuation & Earnings

This table compares Q2 and Okta’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Q2 $241.10 million 13.72 -$35.39 million ($0.37) -202.32
Okta $399.25 million 36.68 -$125.50 million ($1.03) -124.56

Q2 has higher earnings, but lower revenue than Okta. Q2 is trading at a lower price-to-earnings ratio than Okta, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Q2 and Okta’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Q2 -18.89% -16.48% -5.74%
Okta -34.37% -53.36% -15.30%

Summary

Q2 beats Okta on 9 of the 14 factors compared between the two stocks.

Q2 Company Profile

Q2 Holdings, Inc. provides cloud-based digital banking solutions to regional and community financial institutions (RCFIs) in the United States. It offers Q2 Digital Banking and Transactions, a browser-based digital banking solution that delivers RCFI-branded digital banking capabilities; Q2mobility App, a mobile and tablet digital banking solution; Q2mobile Remote Deposit Capture, a partnered solution that allows remote check deposit capture; and Q2 Person-to-Person Payments, a partnered secure and integrated person-to-person payments solution. The company also provides Q2 Corporate digital banking solutions designed to support commercial end users; Q2 Sentinel, a security analytics solution; Q2 Patrol, an event-driven validation product; Q2 SMART, a targeting and messaging platform; and Q2 CardSwap that allows account holders receiving newly issued cards to automatically change their payment information with existing subscription and digital point-of-sale services. In addition, it offers Q2 Gro, a digital account opening, and digital sales and marketing platform; Q2 Biller Direct, a bill payment solution; Centrix Dispute Tracking System, an electronic transaction dispute management solution; Centrix Payments I.Q. System, an ACH file monitoring and risk reporting solution; Centrix Exact/Transaction Management System, a fraud prevention tool; and Q2 Caliper Software Development Kit The company was formerly known as CBG Holdings, Inc. and changed its name to Q2 Holdings, Inc. in March 2013. Q2 Holdings, Inc. was founded in 2005 and is headquartered in Austin, Texas.

Okta Company Profile

Okta, Inc. provides identity solutions for enterprises, small and medium-sized businesses, universities, non-profits, and government agencies in the United States and internationally. The company offers Okta Identity Cloud, a platform that offers a suite of products to manage and secure identities, such as Universal Directory, a cloud-based system of record to store and secure user, application, and device profiles for an organization; Single Sign-On that enables users to access their applications in the cloud or on-premise from various devices with a single entry of their user credentials; Adaptive Multi-Factor Authentication, a product that provides an additional layer of security for cloud, mobile, and Web applications, as well as for data; Lifecycle Management, which enables IT organizations or developers to manage a user's identity throughout its lifecycle; and API Access Management that enables organizations to secure APIs.It also offers customer support and training, and professional services. Okta, Inc. sells its products directly to customers through sales force, as well as through channel partners. The company was formerly known as Saasure, Inc. Okta, Inc. was founded in 2009 and is headquartered in San Francisco, California.

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