Okta, Inc.'s (NASDAQ:OKTA) Intrinsic Value Is Potentially 45% Above Its Share Price
Okta, Inc.'s (NASDAQ:OKTA) Intrinsic Value Is Potentially 45% Above Its Share Price
Key Insights
- Using the 2 Stage Free Cash Flow to Equity, Okta fair value estimate is US$142
- Okta's US$98.26 share price signals that it might be 31% undervalued
- Analyst price target for OKTA is US$113 which is 20% below our fair value estimate
Today we will run through one way of estimating the intrinsic value of Okta, Inc. (NASDAQ:OKTA) by taking the expected future cash flows and discounting them to their present value. We will take advantage of the Discounted Cash Flow (DCF) model for this purpose. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine.
Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model.
The Calculation
We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.
A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, so we discount the value of these future cash flows to their estimated value in today's dollars:
10-year free cash flow (FCF) forecast
2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | |
Levered FCF ($, Millions) | US$426.4m | US$526.9m | US$635.6m | US$830.5m | US$1.10b | US$1.28b | US$1.41b | US$1.53b | US$1.62b | US$1.70b |
Growth Rate Estimate Source | Analyst x21 | Analyst x26 | Analyst x23 | Analyst x6 | Analyst x4 | Analyst x3 | Est @ 10.41% | Est @ 7.97% | Est @ 6.27% | Est @ 5.08% |
Present Value ($, Millions) Discounted @ 7.4% | US$397 | US$457 | US$513 | US$625 | US$771 | US$835 | US$859 | US$864 | US$855 | US$836 |
("Est" = FCF growth rate estimated by Simply Wall St)
Present Value of 10-year Cash Flow (PVCF) = US$7.0b
The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.3%. We discount the terminal cash flows to today's value at a cost of equity of 7.4%.
Terminal Value (TV)= FCF2033 × (1 + g) ÷ (r – g) = US$1.7b× (1 + 2.3%) ÷ (7.4%– 2.3%) = US$34b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$34b÷ ( 1 + 7.4%)10= US$17b
The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is US$24b. In the final step we divide the equity value by the number of shares outstanding. Relative to the current share price of US$98.3, the company appears quite good value at a 31% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out.
The Assumptions
Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Okta as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 7.4%, which is based on a levered beta of 1.106. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.
SWOT Analysis for Okta
- Debt is not viewed as a risk.
- Balance sheet summary for OKTA.
- Shareholders have been diluted in the past year.
- Forecast to reduce losses next year.
- Has sufficient cash runway for more than 3 years based on current free cash flows.
- Good value based on P/S ratio and estimated fair value.
- Not expected to become profitable over the next 3 years.
- What else are analysts forecasting for OKTA?
Moving On:
Valuation is only one side of the coin in terms of building your investment thesis, and it shouldn't be the only metric you look at when researching a company. It's not possible to obtain a foolproof valuation with a DCF model. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. Can we work out why the company is trading at a discount to intrinsic value? For Okta, there are three fundamental aspects you should further examine:
- Risks: Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Okta , and understanding them should be part of your investment process.
- Future Earnings: How does OKTA's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
- Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!
PS. Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock just search here.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
關鍵見解
- 使用兩階段的股本自由現金流,Okta的公允價值估計爲142美元
- Okta的98.26美元股價表明其估值可能被低估了31%
- OKTA的分析師目標股價爲113美元,比我們的公允價值估計低20%
今天,我們將介紹一種估算Okta, Inc.(納斯達克股票代碼:OKTA)內在價值的方法,即採用預期的未來現金流並將其折現爲現值。爲此,我們將利用折扣現金流 (DCF) 模型。在你認爲自己無法理解之前,請繼續閱讀!實際上,它沒有你想象的那麼複雜。
但請記住,估算公司價值的方法有很多,而差價合約只是一種方法。如果你對這種估值還有一些迫切的問題,可以看看 Simply Wall St 分析模型。
計算結果
我們使用的是兩階段增長模型,這只是意味着我們考慮了公司增長的兩個階段。在初始階段,公司的增長率可能更高,而第二階段通常被認爲具有穩定的增長率。在第一階段,我們需要估算未來十年的業務現金流。在可能的情況下,我們會使用分析師的估計值,但是當這些估計值不可用時,我們會從最新的估計值或報告的價值中推斷出之前的自由現金流(FCF)。我們假設自由現金流萎縮的公司將減緩其萎縮速度,而自由現金流不斷增長的公司在此期間的增長率將放緩。我們這樣做是爲了反映早期增長的放緩幅度往往比後來的幾年更大。
差價合約就是關於未來一美元的價值低於今天一美元的概念,因此我們將這些未來現金流的價值折現爲以今天的美元計算的估計價值:
10 年自由現金流 (FCF) 預測
2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | |
Levered FCF(美元,百萬) | 4.264 億美元 | 526.9 億美元 | 635.6 億美元 | 830.5 億美元 | 11.0 億美元 | 12.8 億美元 | 141 億美元 | 153 億美元 | 16.2 億美元 | 17.0 億美元 |
增長率估算來源 | 分析師 x21 | 分析師 x26 | 分析師 x23 | 分析師 x6 | 分析師 x4 | 分析師 x3 | 美國東部標準時間 @ 10.41% | Est @ 7.97% | 美國東部標準時間 @ 6.27% | Est @ 5.08% |
現值(美元,百萬)折扣 @ 7.4% | 397 美元 | 457 美元 | 513 美元 | 625 美元 | 771 美元 | 835 美元 | 859 美元 | 864 美元 | 855 美元 | 836 美元 |
(“Est” = Simply Wall St估計的FCF增長率)
10 年期現金流 (PVCF) 的現值 = 70 億美元
第二階段也稱爲終值,這是企業在第一階段之後的現金流。戈登增長公式用於計算終值,其未來年增長率等於10年期國債收益率2.3%的5年平均水平。我們將終端現金流折現爲今天的價值,權益成本爲7.4%。
終端價值 (TV) = FCF2033 × (1 + g) ÷ (r — g) = 17億美元× (1 + 2.3%) ÷ (7.4% — 2.3%) = 340億美元
終端價值的現值 (PVTV) = 電視/ (1 + r)10= 340億美元÷ (1 + 7.4%)10= 170 億美元
總價值是未來十年的現金流總額加上貼現的終端價值,由此得出總權益價值,在本例中爲240億美元。在最後一步中,我們將股票價值除以已發行股票的數量。相對於目前的98.3美元的股價,該公司看起來物有所值,與目前的股價相比折扣了31%。但請記住,這只是一個近似的估值,就像任何複雜的公式一樣,垃圾進出。
假設
現在,貼現現金流的最重要輸入是貼現率,當然還有實際現金流。投資的一部分是自己對公司未來業績的評估,因此請自己嘗試計算並檢查自己的假設。DCF也沒有考慮一個行業可能的週期性,也沒有考慮公司未來的資本需求,因此它沒有全面反映公司的潛在表現。鑑於我們將Okta視爲潛在股東,因此使用權益成本作爲貼現率,而不是構成債務的資本成本(或加權平均資本成本,WACC)。在此計算中,我們使用了7.4%,這是基於1.106的槓桿測試版。Beta是衡量股票與整個市場相比波動性的指標。我們的測試版來自全球可比公司的行業平均貝塔值,設定在0.8到2.0之間,這是一個穩定的業務的合理範圍。
Okta 的 SWOT 分析
- 債務不被視爲風險。
- OKTA 的資產負債表摘要。
- 在過去的一年中,股東被稀釋了。
- 預計明年將減少損失。
- 根據當前的自由現金流,有足夠的現金流超過3年。
- 根據市銷率和估計的公允價值,物有所值。
- 預計在未來三年內不會盈利。
- 分析師對OKTA還有什麼預測?
繼續前進:
就建立投資論點而言,估值只是硬幣的一面,它不應該是你在研究公司時唯一考慮的指標。使用DCF模型不可能獲得萬無一失的估值。最好你運用不同的案例和假設,看看它們將如何影響公司的估值。例如,公司權益成本或無風險利率的變化會對估值產生重大影響。我們能否弄清楚爲什麼公司的交易價格低於內在價值?對於 Okta,您應該進一步研究三個基本方面:
- 風險:舉例來說,投資風險的幽靈無處不在。我們已經確定了Okta的兩個警告信號,了解它們應該是您投資過程的一部分。
- 未來收益:與同行和整個市場相比,OKTA的增長率如何?通過與我們的免費分析師增長預期圖表互動,深入了解未來幾年的分析師共識數字。
- 其他高質量的替代品:你喜歡一個優秀的全能選手嗎?瀏覽我們的高品質股票互動清單,了解您可能還會錯過什麼!
PS。Simply Wall St每天都會更新每隻美國股票的差價合約計算結果,因此,如果您想找到任何其他股票的內在價值,請在此處搜索。
對這篇文章有反饋嗎?對內容感到擔憂?直接聯繫我們。 或者,給編輯團隊 (at) simplywallst.com 發送電子郵件。
Simply Wall St的這篇文章本質上是籠統的。我們僅使用公正的方法根據歷史數據和分析師的預測提供評論,我們的文章無意作爲財務建議。它不構成買入或賣出任何股票的建議,也沒有考慮到您的目標或財務狀況。我們的目標是爲您提供由基本數據驅動的長期重點分析。請注意,我們的分析可能不考慮最新的價格敏感型公司公告或定性材料。簡而言之,華爾街沒有持有任何上述股票的頭寸。
譯文內容由第三人軟體翻譯。
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