Opera Ltd (OPRA, Financial) has experienced a notable daily loss of -4.93%, and over the past three months, the stock has seen a decline of -17.14%. Despite these fluctuations, Opera's Earnings Per Share (EPS) stand at $0.72. Investors are often on the lookout for opportunities where the market may not have fully recognized a company's intrinsic value. With this in mind, one might wonder: is Opera's stock modestly undervalued? The following valuation analysis seeks to answer this question, inviting readers to delve into the financial nuances of Opera Ltd (OPRA).
Company Introduction
Opera Ltd is a prominent global internet brand that commands a large, engaged, and growing user base. The company offers a diverse array of products and services, including PC and mobile browsers, Opera Gaming portals, development tools, Opera News content recommendation products, and various e-commerce services. Opera's features cater to user privacy and security, boasting ad-blocking and built-in VPN capabilities. The company's product line extends to specialized browsers like Opera Mini, Opera Browser for Android and iOS, Opera for Computers, and the gaming-centric Opera GX and Opera GX Mobile. Its latest venture includes a beta release of a Web3-centric browser, appealing to the burgeoning crowd of crypto enthusiasts.
Summarize GF Value
The GF Value is a proprietary metric that reflects the intrinsic value of a stock, calculated through a unique methodology that incorporates historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. The GF Value Line, which can be found on our summary page, indicates the fair value at which the stock should ideally trade.
At its current price of $11.29 per share, with a market cap of $1 billion, Opera (OPRA, Financial) is considered to be modestly undervalued according to the GuruFocus Value calculation. This suggests that the long-term return of Opera's stock could potentially exceed its business growth, offering an appealing prospect for value investors.
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Financial Strength
Investors must consider a company's financial strength to avoid potential permanent capital loss. A key indicator of financial robustness is the cash-to-debt ratio. Opera boasts a cash-to-debt ratio of 9.85, ranking it above 58.94% of its peers in the Interactive Media industry. This strong balance sheet is reflected in GuruFocus's financial strength rating of 8 out of 10 for Opera.
Profitability and Growth
Investing in profitable companies, especially those with a track record of consistent profitability, typically poses less risk. Opera has been profitable for 5 out of the past 10 years. With a revenue of $380.10 million and Earnings Per Share (EPS) of $0.72, along with an operating margin of 15.36%, Opera's profitability is considered fair, with a ranking of 6 out of 10.
Growth is a vital component of valuation, as it is closely correlated with long-term stock performance. Opera's average annual revenue growth rate is 24.7%, which stands out positively in the Interactive Media industry. However, its 3-year average EBITDA growth rate of -14.3% indicates areas where improvement is needed.
ROIC vs WACC
Evaluating a company's profitability involves comparing its Return on Invested Capital (ROIC) against its Weighted Average Cost of Capital (WACC). A higher ROIC than WACC suggests value creation for shareholders. Opera's ROIC over the past 12 months stands at 7.07, marginally surpassing its WACC of 6.92.
Conclusion
In summary, Opera (OPRA, Financial) is assessed to be modestly undervalued. The company's financial condition is robust, and its profitability is reasonable. However, its growth could be better, as it ranks below a significant portion of its competitors in the Interactive Media industry. For a more detailed understanding of 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.
