Is Opera (OPRA) Pricing Look Interesting After Strong Three Year Share Price Performance?

• If you are wondering whether Opera's share price really reflects what the business is worth, you are not alone. This article is written with that exact question in mind.
• Over the short term the stock has seen mixed moves, with a 0.1% decline over the last 7 days, a 16.2% gain over 30 days, a 6.0% return year to date, an 11.3% decline over 1 year, and a 102.9% gain over 3 years, compared to a 57.8% return over 5 years.
• Recently, investors have been reacting to a series of Opera-focused updates, including coverage that highlights its position as a software company listed on the Nasdaq and ongoing attention from retail investors tracking its share price history. This backdrop helps explain why the stock's shorter term moves look different to its longer term record.
• On our valuation checks, Opera currently scores 6 out of 6 for being assessed as undervalued. Next we will walk through the main valuation approaches behind that score, before finishing with a perspective that can help you make better sense of valuation in the real world.

Find out why Opera's -11.3% return over the last year is lagging behind its peers.

Approach 1: Opera Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model takes projected future cash flows, then discounts them back to today to estimate what the business might be worth right now.

For Opera, the model uses last twelve months free cash flow of about $96.2 million as a starting point and then applies a 2 Stage Free Cash Flow to Equity approach. Analyst estimates and subsequent projections suggest free cash flow reaching $276.9 million in 2030, with a series of annual projections between 2026 and 2035 that are discounted back to today using Simply Wall St’s cash flow projections framework.

Bringing all of those discounted cash flows together, the DCF outputs an estimated intrinsic value of $61.71 per share. Relative to the current share price, this points to an implied discount of 75.5%, which indicates that the stock screens as materially undervalued on this model.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Opera is undervalued by 75.5%. Track this in your watchlist or portfolio, or discover 50 more high quality undervalued stocks.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Opera.

Approach 2: Opera Price vs Earnings

For a profitable company like Opera, the P/E ratio is a useful way to relate what you pay for each share to the earnings that business generates. In simple terms, higher expected growth and lower perceived risk usually justify a higher P/E, while slower expected growth or higher risk tend to be associated with a lower P/E.

Opera currently trades on a P/E of 12.49x. That sits below the Software industry average of 28.07x and also below the peer average of 23.78x that groups similar companies. On its own, that gap indicates the market is pricing Opera on a lower multiple than those benchmarks.

Simply Wall St’s Fair Ratio estimate for Opera is 25.93x. This is a proprietary P/E level that reflects factors such as Opera’s earnings growth profile, profit margins, risk indicators, industry, and market cap. Because it ties the multiple to company specific drivers instead of just broad group averages, the Fair Ratio can be a more tailored reference point than a simple comparison with peers or the wider Software industry. With the Fair Ratio above the current 12.49x, Opera screens as undervalued on this metric.

Result: UNDERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 20 top founder-led companies.

Upgrade Your Decision Making: Choose your Opera Narrative

Earlier we mentioned that there is an even better way to understand valuation. On Simply Wall St that shows up as Narratives, where you write a short story about how you see Opera, link that story to specific assumptions for future revenue, earnings and margins, and the platform converts it into a fair value that you can compare with the current share price on the Community page used by millions of investors.

Because each Narrative is tied to a live forecast, it updates automatically when fresh information such as news or earnings is added. This helps your view stay connected to the latest numbers rather than a static spreadsheet.

For Opera, one investor might build a cautious Narrative that lines up with a lower analyst fair value of about US$21.50. Another might build an optimistic Narrative closer to the higher fair value of about US$32.11. By setting up your own view in between or outside that range, you can more clearly see whether the current price looks above or below what you think the shares are worth and decide how you want to act on that gap.

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com