Why a proposed class action settlement matters for Oppenheimer Holdings

Oppenheimer Holdings (OPY) is back in focus after Oppenheimer & Co. Inc. agreed to a proposed US$70,000,000 settlement in a class action lawsuit, with court approval scheduled to be considered in September 2026.

The proposed settlement arrives at a time when Oppenheimer Holdings has seen a 30-day share price return of 15.13% and a year-to-date share price return of 45.29%. Its 1-year total shareholder return of 62.26% and 3-year total shareholder return of 177.61% point to strong momentum rather than a short-lived reaction to recent legal headlines.

If this legal development has you reassessing risk and opportunity, it can help to broaden your view of the market by checking out the 20 top founder-led companies

So with Oppenheimer Holdings posting strong recent share returns while a proposed US$70,000,000 settlement hangs in the balance, is the current price already reflecting the legal overhang and recent momentum, or is the market still underestimating future growth?

Preferred Price-to-Earnings of 11.6x for Oppenheimer Holdings: Is it justified?

On a simple earnings yardstick, Oppenheimer Holdings trades on a P/E of 11.6x, while the last close sits at $105.54. This compares to higher multiples across both the US market and its Capital Markets peers.

The P/E ratio compares the company’s share price to its earnings per share. It gives a quick sense of how much investors are paying for each dollar of profit. For a diversified investment bank and broker-dealer like Oppenheimer Holdings, which generates income from capital markets and wealth management activities, the P/E often reflects how the market is weighing its earnings profile, fee-based revenue mix, and sensitivity to deal activity.

Here, the picture is mixed. Earnings have declined by 13.6% per year over the past 5 years. However, earnings growth over the past year of 27.6% is stronger than that 5 year trend, and current net profit margins of 6% are higher than last year’s 5.6%. At the same time, Return on Equity of 10% is described as low. Taken together, the current valuation could be seen as the market applying a relatively lower earnings multiple while the business recalibrates from a period of longer term profit decline alongside a more recent improvement.

Compared to the US Capital Markets industry average P/E of 39.6x and a peer average of 20.4x, Oppenheimer Holdings is assessed as good value on this preferred multiple. It also trades below the broader US market P/E of 19x. That is a sizeable gap, suggesting investors are currently paying far less for each dollar of OPY earnings than for many sector peers and the wider market.

Result: Price-to-Earnings of 11.6x (UNDERVALUED)

However, the proposed US$70,000,000 class action settlement and a relatively low value score of 2 both indicate that legal and valuation risks may yet reshape the Oppenheimer Holdings story.

Another view on Oppenheimer Holdings using our DCF model

The P/E points to Oppenheimer Holdings looking cheap, but our DCF model tells a different story. On this view, the current share price of $105.54 sits well above an estimated future cash flow value of $58.76, which screens as overvalued instead of undervalued.

That leaves you with a clear tension: is the market correctly pricing improved earnings momentum, or is it leaning too far ahead of the cash flow reality?

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 44 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 sentiment on Oppenheimer Holdings looking split between opportunity and caution, now is a good time to review the data yourself, decide where you stand, and then weigh the 1 key reward and 1 important warning sign

Looking for more investment ideas beyond Oppenheimer Holdings?

If Oppenheimer Holdings has sharpened your focus, now is the moment to widen your search and compare it with other potential opportunities before the market moves on.

• Spot potential mispricings early by checking companies highlighted in the 44 high quality undervalued stocks.
• Build a steadier income stream by reviewing the 10 dividend fortresses.
• Prioritise downside protection by focusing on the 74 resilient stocks with low risk scores.

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.