A Fresh Look at Freedom Holding (NasdaqCM:FRHC) Valuation After Launch of Freedom Bank Georgia

Freedom Holding (NasdaqCM:FRHC) has just announced the launch of Freedom Bank Georgia, established as a subsidiary of Freedom Bank Kazakhstan. This move highlights the company’s strategic push into new markets across Central Asia, the Caucasus, and Europe.

See our latest analysis for Freedom Holding.

News of Freedom Bank Georgia’s launch seems to have given Freedom Holding a fresh jolt, with a 3.95% one-day share price return and momentum building steadily. Year-to-date returns are up 27.41%. Zooming out, the company has delivered a stellar 71.14% total shareholder return over the past year, with multi-year holders seeing even greater gains as expansion efforts ramp up.

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But with such a strong run behind it, is Freedom Holding still trading at a discount to its true value, or are investors already baking in high expectations for future expansion? Could there still be a buying opportunity here?

Price-to-Earnings of 128.9x: Is it justified?

Freedom Holding is currently priced at a hefty 128.9x price-to-earnings ratio, far exceeding both peer and industry averages. With a last close of $169.77, investors are clearly paying high premiums compared to its sector.

The price-to-earnings (P/E) ratio is a benchmark commonly used to value companies by comparing their current share price to per-share earnings. For financial services firms like Freedom Holding, the P/E helps signal what the market expects for future profit growth versus direct competitors.

At 128.9x, the valuation is much higher than the US Capital Markets industry average of just 24.9x, as well as the peer group’s 18.1x. This gap suggests investors are factoring in exceptional growth prospects or unique advantages that set Freedom Holding apart. In reality, this leaves little margin for error if future profits fall short of these lofty expectations.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Earnings of 128.9x (OVERVALUED)

However, any slowdown in expansion or a dip in profitability could quickly shift sentiment and challenge the sustainability of such a high valuation.

Find out about the key risks to this Freedom Holding narrative.

Another View: Discounted Cash Flow Analysis

While Freedom Holding’s share price looks steep compared to sector averages, our DCF model offers a different perspective. According to this method, the fair value sits at $77.57 per share, making the recent closing price appear significantly overvalued. Does this model suggest a reality check ahead, or is the market seeing something the model cannot?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Freedom Holding 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 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Freedom Holding Narrative

If our analysis does not match your perspective, or you would rather form your own conclusions, explore the data and craft a narrative of your own in just a few minutes, Do it your way.

A great starting point for your Freedom Holding research is our analysis highlighting 2 important warning signs that could impact your investment decision.

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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.

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