• If you are wondering whether Futu Holdings at US$154.50 is still reasonably priced after a strong run, the next sections will focus squarely on what the current share price might imply about value.
• The stock has returned 10.2% over the past week and 9.5% over the past month, with a 92.2% return over the last year but a 13.4% decline year to date and a 230.6% return over three years and 3.3% over five years.
• Recent coverage has highlighted Futu Holdings as a prominent online brokerage play listed on the Nasdaq, with investors paying attention to its role in digital trading platforms and regulatory developments around that space. This context helps frame why the share price has been active and why many investors are now reviewing what they are paying for that story.
• On Simply Wall St's valuation checks, Futu Holdings records a value score of 6/6. The sections that follow will walk through the key valuation methods behind that score and will point to an even richer way to think about valuation at the end.

Approach 1: Futu Holdings Excess Returns Analysis

The Excess Returns model looks at how much profit a company is expected to generate above the return that shareholders require, then capitalizes those extra profits into an intrinsic value per share.

For Futu Holdings, the starting point is a Book Value of $286.85 per share and an Average Return on Equity of 26.14%. Based on analyst expectations, this translates into a Stable EPS of $111.51 per share, sourced from weighted future Return on Equity estimates from 16 analysts. The required return for shareholders, or Cost of Equity, is $36.07 per share. On this basis, the model estimates an Excess Return of $75.44 per share.

Looking further out, the Stable Book Value is assessed at $426.66 per share, using weighted future Book Value estimates from 10 analysts. These inputs are combined to arrive at an intrinsic value of about $245.48 per share for NasdaqGM:FUTU. Compared with the current share price of $154.50, the Excess Returns model points to a 37.1% implied discount, which indicates the shares trade below this estimate of intrinsic value.

Result: UNDERVALUED

Our Excess Returns analysis suggests Futu Holdings is undervalued by 37.1%. Track this in your watchlist or portfolio, or discover 58 more high quality undervalued stocks.

Approach 2: Futu Holdings Price vs Earnings

For a profitable company like Futu Holdings, the P/E ratio is a straightforward way to relate what you pay per share to the earnings that support that price. It is a quick sense check of how many dollars investors are currently paying for each dollar of earnings.

What counts as a “normal” or “fair” P/E depends on how the market views a company’s growth potential and risk. Higher expected growth or lower perceived risk can justify a higher P/E, while lower growth or higher risk usually points to a lower P/E.

Futu Holdings currently trades on a P/E of 14.86x. This sits below the Capital Markets industry average P/E of 39.09x and also below the peer average of 21.62x. To go a step further, Simply Wall St calculates a proprietary “Fair Ratio” of 17.65x, which is the P/E that would typically be expected given factors such as Futu Holdings earnings growth profile, industry, profit margin, market cap and key risks.

This Fair Ratio is more tailored than a simple comparison with peers or the broad industry because it explicitly incorporates company specific characteristics rather than relying on broad group averages. Comparing the Fair Ratio of 17.65x with the current P/E of 14.86x suggests the shares trade below this fair multiple.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Futu Holdings Narrative

Earlier there was mention of an even better way to understand valuation. Narratives are introduced here as a simple way for you to attach your own story about Futu Holdings to the numbers by linking a view on future revenue, earnings and margins to a Fair Value. You can then compare that Fair Value with the current price to decide whether the stock looks attractive. Each Narrative is hosted on Simply Wall St's Community page and updated as new news or earnings arrive. For Futu Holdings, one investor might lean toward the more cautious fair value around US$193.04, while another leans toward the higher fair value around US$281.97. Narratives help you see clearly which of those stories you feel more comfortable backing.

Do you think there's more to the story for Futu Holdings? Head over to our Community to see what others are saying!

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.