Is Okta, Inc. overvalued or undervalued?

As of 27 May 2025, Okta, Inc. has moved from an attractive to a fair valuation grade. The company appears to be overvalued based on its current metrics, with a P/E ratio of 147, significantly higher than the peer average of 138.28 for companies like PTC, Inc. (P/E of 45.58) and Zoom Video Communications, Inc. (P/E of 22.48). Additionally, Okta's EV to EBITDA stands at 145.00, which is considerably elevated compared to the industry benchmarks.
In terms of return on equity (ROE) and return on capital employed (ROCE), Okta shows low figures at 1.90% and 0.49%, respectively, indicating inefficiencies relative to its peers. While the PEG ratio of 1.05 suggests a reasonable growth expectation, the overall high valuation ratios and low profitability metrics lead to the conclusion that Okta, Inc. is overvalued. Despite a positive year-to-date return of 25.20%, this performance is overshadowed by a significant decline over the past five years, which raises concerns about its sustainability compared to the S&P 500's returns.