• Investors may be wondering whether Oppenheimer Holdings at around US$99 a share still offers value, or if most of the opportunity has already been priced in.
• The stock has been volatile recently, with an 11.3% pullback over the last 7 days alongside a 9.3% gain over 30 days, and returns of 36.8% year to date and 69.4% over the past year.
• Recent headlines around capital markets activity and trading conditions have kept investor attention on brokers and financial services stocks, including Oppenheimer Holdings. These updates help frame how the market is currently thinking about the company and its earnings power.
• Right now, Oppenheimer Holdings scores 2 out of 6 on a series of undervaluation checks. The next step is to compare what different valuation methods indicate about the stock and then look at a more structured way to bring those signals together by the end of this article.

Oppenheimer Holdings scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Oppenheimer Holdings Excess Returns Analysis

The Excess Returns model looks at whether a company can earn more on its equity than the return shareholders require, and how long that can reasonably continue. Instead of focusing on cash flows, it compares the company’s profitability on its equity base with its cost of equity.

For Oppenheimer Holdings, book value is $88.95 per share and stable EPS is estimated at $6.90 per share, based on the median return on equity from the past 5 years. The stable book value input is $81.10 per share, taken from the median book value over the same period. The model uses a cost of equity of $8.68 per share and calculates an excess return of $1.79 per share. This implies that current returns on equity, at an 8.50% average, are not materially higher than the required return.

Bringing these inputs together, the Excess Returns model produces an intrinsic value of about $56.16 per share. Compared with a share price around $99, this suggests the stock screens as overvalued, with an implied premium of roughly 76.9%.

Result: OVERVALUED

Our Excess Returns analysis suggests Oppenheimer Holdings may be overvalued by 76.9%. Discover 51 high quality undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Oppenheimer Holdings Price vs Earnings

P/E is a common way to value profitable companies because it ties the share price directly to earnings, which are a core driver of long term returns. The higher the expected earnings growth and the lower the perceived risk, the higher a “normal” or “fair” P/E ratio investors may be willing to accept, and vice versa.

Oppenheimer Holdings currently trades at a P/E of 10.95x. That compares with a peer average of 15.26x and a Capital Markets industry average of 42.73x, so the stock sits well below both of those benchmarks. On the surface that might suggest a discount, but simple comparisons to peers or the broad industry can be misleading because they do not adjust for company specific factors.

Simply Wall St’s “Fair Ratio” is a proprietary estimate of what a reasonable P/E might be for Oppenheimer Holdings given its earnings profile, industry, profit margins, market value and risk characteristics. Because it attempts to align the multiple with these fundamentals, it is designed to be more targeted than just lining the stock up against sector or peer averages. Comparing the current 10.95x P/E to this Fair Ratio indicates that Oppenheimer Holdings is OVERVALUED on this measure.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Oppenheimer Holdings Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Meet Narratives, a simple way for you to attach a clear story about Oppenheimer Holdings to the numbers behind it, including your view on fair value and how revenue, earnings and margins might develop over time.

A Narrative links three things that matter to you as an investor: how you think the company’s business story plays out, what that means for a financial forecast, and the fair value that follows from those assumptions.

On Simply Wall St, Narratives are available on the Community page and are used by millions of investors. You can quickly see different fair value estimates, compare them with the current share price, and decide whether the stock looks relatively expensive or inexpensive based on a view you find reasonable.

Because Narratives update automatically when new information such as news or earnings is added to the platform, they give you a living view of Oppenheimer Holdings. One investor might see limited upside at around US$60 per share, while another, using different assumptions, might see opportunity closer to US$140 per share.

Do you think there's more to the story for Oppenheimer 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.