Why Oppenheimer Holdings (OPY) Is On Investors’ Radar Today
Oppenheimer Holdings (OPY) has caught investor attention after a recent stretch of mixed short term trading, with the stock showing a 7 day decline alongside gains over the past month and past 3 months.
That contrast, combined with a last close of $106.81 and a market value around $1.14b, is prompting some investors to reassess how this middle market investment bank and broker dealer fits into their portfolios.
See our latest analysis for Oppenheimer Holdings.
Despite the recent 1 day share price decline of 6.7% and 7 day share price return of negative 2.1%, the 30 day and year to date share price returns of 17.4% and 47.0% indicate that momentum has been strong for investors, supported by a 1 year total shareholder return of 79.8% and a 3 year total shareholder return near 3x.
If OPY’s move has you rethinking where to find the next opportunity, it could be a good moment to scan the market using the 17 top founder-led companies
With OPY up 47.0% year to date and delivering a 3 year total shareholder return near 3x, yet carrying a low value score of 2, should you see untapped upside here or assume the market is already pricing in future growth?
Price-to-Earnings of 7.7x: Is It Justified?
On a simple earnings yardstick, Oppenheimer Holdings screens as inexpensive, with a P/E of 7.7x alongside a last close of $106.81. That P/E sits well below several key comparison points, which is why many investors are questioning whether the recent share price strength has fully caught up with the earnings profile.
The P/E ratio compares the share price to earnings per share, so a lower number often signals that the market is paying less for each dollar of current earnings. For a middle market investment bank and broker dealer that generates income across brokerage, wealth management, asset management, and investment banking, this is a straightforward way to benchmark what investors are currently willing to pay for its profit stream.
- OPY’s P/E of 7.7x is below the US market average P/E of 19.4x.
- It is also below the US Capital Markets industry average P/E of 42.2x.
- Compared with a peer group average P/E of 12.3x, OPY again trades at a lower multiple.
Those gaps are material, and they sit alongside some improving company level metrics. Earnings grew by 107.4% over the past year and current net profit margins of 9.6% are higher than the 5.3% reported last year. OPY also reports high quality earnings and its earnings growth over the past year exceeded the Capital Markets industry, which recorded 20.4% earnings growth.
At the same time, the picture is not one way. Over the past 5 years, earnings declined by 16.4% per year, and the SWS DCF model suggests OPY, at $106.81, is trading above an estimated future cash flow value of $53.43. So while the P/E looks low next to the market and peers, the DCF estimate points to a market price that is richer than that cash flow based fair value, which some investors may see as a sign that recent earnings strength is not yet backed by a longer track record.
Result: Price-to-Earnings of 7.7x (UNDERVALUED).
However, there are still clear risks, including the SWS DCF estimate sitting well below the US$106.81 share price and historically uneven five-year earnings trends.
Find out about the key risks to this Oppenheimer Holdings narrative.
Another Angle On Value
The SWS DCF model paints a very different picture for Oppenheimer Holdings, with an estimated future cash flow value of $53.43 versus the current $106.81 share price. On that measure, the stock screens as expensive, which sits in clear tension with the low 7.7x P/E. Which signal do you trust more right now?
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Oppenheimer Holdings for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 49 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
Seen enough to sense both optimism and concern around OPY? Now is a good time to review the data for yourself and weigh the 2 key rewards and 2 important warning signs.
Looking for more investment ideas?
Do not stop your research with OPY, especially when there are other stocks with different risk, income, and quality profiles waiting to be screened on Simply Wall Street.
- Spot potential mispricings quickly by scanning a curated set of high quality opportunities using the 49 high quality undervalued stocks.
- Strengthen the income side of your portfolio by reviewing companies in the 13 dividend fortresses that may suit yield focused goals.
- Sleep easier at night by checking out companies in the 72 resilient stocks with low risk scores that align with a more cautious approach.
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.
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