Opera Ltd (OPRA, Financial) has recently demonstrated a notable daily gain of 13.27%, although it has experienced a 3-month loss of -6.99%. With an Earnings Per Share (EPS) of $0.72, investors may wonder whether Opera (OPRA) is modestly undervalued. The following analysis delves into Opera's valuation to provide a clearer picture.
Company Overview
Opera Ltd (OPRA, Financial) is a prominent global internet brand, offering a suite of products and services that cater to a vast and engaged user base. With a diverse range of offerings from PC and mobile browsers to Opera Gaming portals, Opera News, and e-commerce services, Opera stands out in the tech landscape. Its commitment to privacy and security is evident in features like ad blocking and a built-in VPN. Opera's innovative spirit is showcased in its latest Web3-centric browser, designed for crypto enthusiasts. With a current price of $12.38 and a GF Value of $15.14, Opera (OPRA) presents an interesting case for valuation analysis.
Understanding the GF Value
The GF Value is a unique metric that calculates the intrinsic value of a stock like Opera (OPRA, Financial). It incorporates historical trading multiples, a GuruFocus adjustment factor for past performance and growth, and projected business performance. When a stock's price significantly deviates from the GF Value Line, it may indicate overvaluation or undervaluation, influencing future returns. Opera's current market cap of $1.10 billion and share price suggest it is modestly undervalued, potentially leading to higher long-term returns relative to its business growth.
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Financial Strength
Investors must assess a company's financial strength to mitigate the risk of capital loss. Opera's cash-to-debt ratio of 9.85 places it well within its industry, indicating robust financial health. The overall financial strength of Opera is rated 8 out of 10, suggesting a strong foundation for future growth.
Profitability and Growth
Profitable companies with consistent performance are typically safer investments. Opera has been profitable for 5 out of the last 10 years, with a solid operating margin of 15.36%, outperforming many in the Interactive Media industry. However, growth is equally crucial for valuation. Opera's 3-year average annual revenue growth is impressive, but its EBITDA growth rate has room for improvement.
ROIC vs. WACC
Comparing a company's Return on Invested Capital (ROIC) with its Weighted Average Cost of Capital (WACC) can reveal its value creation potential. Opera's ROIC is just below its WACC, indicating a need for more efficient capital utilization to enhance shareholder value.
Conclusion
Opera Ltd (OPRA, Financial) appears modestly undervalued, with strong financials and fair profitability. While its growth rate could be stronger, the company's overall prospects remain positive. For a deeper dive into Opera's financials, investors can explore its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
