Why Oppenheimer Holdings (OPY) Is Back In The Spotlight

Oppenheimer Holdings (OPY) continues to attract attention after a strong run, with the stock up about 69% year to date and roughly 73% over the past year.

Recent moves suggest momentum around Oppenheimer Holdings is still building, with a 7 day share price return of 4.6% and a 30 day gain of 9.9%. These add to a 90 day rise of 21.4% and a 3 year total shareholder return above 200%.

Scan beyond Oppenheimer Holdings and see how other fast moving financials stack up using our curated list of 31 high quality undervalued stocks.

Oppenheimer Holdings has delivered a strong run for shareholders, which is one thing. Whether that middle market broker is now priced fairly at around $122 per share is a separate question that the valuation work needs to answer.

Price-to-Earnings of 12.8x: Is it justified?

At roughly $122.73 per share, Oppenheimer Holdings trades on a P/E of 12.8x, which screens as inexpensive compared with both its industry group and the broader US market.

The P/E ratio compares the current share price to earnings per share and gives you a shorthand view of how much investors are paying for each dollar of profit. For a middle market investment bank and broker like Oppenheimer Holdings, earnings can swing with deal activity and trading volumes, so this metric often becomes a quick way to gauge how the market is weighing that profit profile against peers.

Here the picture is clear. The 12.8x P/E sits well below the US Capital Markets industry average of 39.7x and also below the peer average of 19.2x. That is a sizable gap, suggesting investors are attaching a lower earnings multiple to Oppenheimer Holdings compared with similar businesses, even after a 1 year total return above 70% and a 3 year total shareholder return above 200%.

In addition to the multiples work, the SWS DCF model currently estimates a future cash flow value of $70.12 per share for Oppenheimer Holdings, which is materially below the last close of $122.73. That points to a market price that sits well above this particular cash flow based fair value framework and provides a second lens alongside the earnings multiple.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Earnings of 12.8x, appears inexpensive compared with peers and industry.

Still, the Oppenheimer Holdings story carries risk if deal activity, trading volumes or wealth management flows soften, or if the market applies an even lower earnings multiple.

Find out about the key risks to this Oppenheimer Holdings narrative.

Another View on Oppenheimer Holdings’ Valuation

The earlier P/E work presented Oppenheimer Holdings as inexpensive. The SWS DCF model points in the opposite direction. It estimates a future cash flow value of $70.12 per share, which is well below the current price of $122.73, so this second lens presents the stock as overvalued. Which signal should carry more weight for you?

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 31 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

Signals on Oppenheimer Holdings appear mixed so far. If you want your view to go beyond the headlines, consider acting promptly and weighing both the potential upside and the risks in 1 key reward and 1 important warning sign.

Looking for more investment ideas beyond Oppenheimer Holdings?

If you want to keep your edge, do not stop at Oppenheimer Holdings. Use the Simply Wall St screener to uncover other opportunities that match your style.

• Target resilient balance sheets by scanning our list of solid balance sheet and fundamentals (24 results) that combine financial strength with cleaner fundamentals.
• Spot potential mispricing by running through the 31 high quality undervalued stocks that filters for quality businesses trading below their assessed worth.
• Hunt for future leaders early by checking the 17 high quality undiscovered gems built to surface under-the-radar stocks with solid underlying numbers.

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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