Should Investors Buy Zscaler Stock Instead of Okta Stock?

Parkev Tatevosian, CFA•Jul 26, 2026

Summary

Parkev provides a head-to-head comparison of cybersecurity leaders Zscaler and Okta, noting that the industry remains one of the most attractive sectors for investors. Parkev analyzes several key metrics including sales growth, operating profit margins, and return on invested capital (ROIC). While both companies have historically operated at a loss, Parkev highlights that both are making rapid progress toward consistent profitability, with Okta currently leading in operating margins while Zscaler has recently taken the lead in total revenue volume.

Zscaler (ZS): Parkev states that Zscaler has demonstrated impressive momentum by accelerating revenue growth and surpassing Okta on a trailing 12-month basis for the first time in late 2025. Although Zscaler currently reports a negative operating profit margin of 4.5%, Parkev emphasizes that the company is showing consistent improvement toward the break-even point. Parkev calculates a fair value of $173 for Zscaler using a discounted cash flow model, which suggests the stock is currently undervalued relative to its market price of $149.

Okta (OKTA): Parkev notes that Okta currently maintains a superior operating profit margin of 5.7% and a positive return on invested capital of 3.31%. While Okta has closed the valuation gap with Zscaler in recent months, Parkev points out that its forward price-to-earnings ratio stands at approximately 33. Based on Parkev's discounted cash flow analysis, Okta's fair value is estimated at $125, suggesting it is fairly valued compared to its current market price of $142 when accounting for a margin of safety.

Mentioned Stocks

Sentiment: BUYAction: RECOMMENDED

Reasoning: Parkev states that Zscaler is the better buy because its revenue growth has surpassed Okta's and its valuation is more attractive. Parkev's discounted cash flow model yields a fair value of $173, which is significantly higher than the current market price of $149.

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OKTA

Sentiment: HOLDAction: null

Reasoning: Parkev notes that Okta is performing well fundamentally with positive operating margins of 5.7%, but considers it less attractive than Zscaler. Parkev calculates a fair value of $125, which is lower than the current market price of $142, leading to the conclusion that it is fairly valued rather than a bargain.

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