Recent share performance and context

Oppenheimer Holdings (OPY) has seen mixed share performance recently, with the stock down about 3% over the past day and roughly 9% over the past month, yet up around 9% in the past 3 months.

Despite the recent 9% decline in the 1 month share price return to US$93.86, momentum over the year still looks constructive. A 29.21% year to date share price return and a 50.07% 1 year total shareholder return indicate that investors have been rewarded for staying invested even as short term sentiment has cooled.

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So with Oppenheimer Holdings trading on an implied intrinsic discount of about 68% despite strong 1 year and 3 year total returns, is the recent pullback a potential opportunity, or is the market already pricing in future growth?

Preferred Price-to-Earnings of 10.3x: Is it justified?

On a simple earnings yardstick, Oppenheimer Holdings looks inexpensive, with a P/E of 10.3x at a last close of $93.86 compared with both peers and the broader US market.

The P/E ratio compares the current share price with the company’s earnings per share, giving you a quick sense of how much investors are paying for each dollar of profit. For a mid sized investment bank and broker dealer like Oppenheimer Holdings, which earns fees across capital markets and wealth management, this measure is a common way investors compare it with other capital markets stocks.

Here, the company’s 10.3x P/E sits below the peer average of 22.4x and also below the wider US market at 18.6x. That gap suggests investors are paying a lower price for each dollar of OPY earnings than they are for similar companies, even though earnings grew 27.6% over the past year and margins are slightly higher than last year. Against the US Capital Markets industry average P/E of 40.1x, the discount is even wider, which points to the market assigning OPY a much lower earnings multiple than most of its sector.

Result: Price-to-Earnings of 10.3x (UNDERVALUED)

However, this lower P/E could reflect risks around volatile capital markets revenue and the company’s heavy Americas concentration, which together may pressure earnings resilience.

Another view on value: DCF sends a different message

While the low 10.3x P/E hints at value, the SWS DCF model points the other way. With the stock at $93.86 versus an estimated future cash flow value of $55.96, this approach suggests OPY is overvalued. Which signal should carry more weight for you right now?

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 48 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

With mixed signals across valuation, risk and reward, where does that leave you today? Act while the data is fresh and weigh the 1 key reward and 2 important warning signs.

Looking for more investment ideas?

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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.