Opera (OPRA) Good Results and Undervalue (Q3 2024 Earnings)

Opera Limited (NASDAQ: OPRA) has demonstrated robust performance recently, with impressive growth in its financial metrics and a strong stock price trajectory. Despite these successes, the stock remains undervalued relative to its peers, making it an attractive investment opportunity. This post explores Opera’s recent results, financial performance, valuation, growth potential, and associated risks.

Overview of Opera Limited

Founded in 1996, Opera Limited is a global internet company known for its web browsers, AI-powered content discovery platforms, and expanding ecosystem of digital products. The company serves over 319 million monthly active users worldwide, focusing on innovation in browsing, crypto-enabled services, and AI integration. Opera also invests heavily in adjacent sectors like gaming and fintech to diversify its revenue streams and capitalize on digital transformation trends.

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Opera Financial Performance

Opera's Q3 2024 financial results demonstrate significant growth across key metrics. The company reported revenue of $123.21 million for the quarter, reflecting a 20.01% increase compared to $102.64 million in Q3 2023. On a trailing twelve months (TTM) basis, revenue rose to $447.82 million, an increase of 17.84% year-over-year. Quarterly earnings per share (EPS) reached $0.20, up 11.11% from $0.18 in the same quarter last year, while TTM EPS saw a remarkable 142.24% jump, growing from $0.73 in Q3 2023 to $1.78 in Q3 2024, showcasing substantial profit expansion. Additionally, TTM free cash flow per share improved by 10.47%, rising from $0.86 to $0.95, emphasizing Opera's strong cash generation capabilities to support its growth. This robust financial performance underscores Opera's ability to sustain innovation while delivering profitability and shareholder value.

OPRA Stock Price Performance and Valuation

Over the past year, Opera’s stock has achieved a remarkable 56.62% increase, significantly outperforming the S&P 500’s 28.42% gain during the same period. Currently trading at $19.39, Opera’s valuation metrics highlight its attractiveness relative to industry peers. The company has a price-to-sales (P/S) TTM ratio of 3.82, a price-to-earnings (P/E) TTM ratio of 10.92, a forward P/E ratio of 9.32, and a price-to-free cash flow (P/FCF) TTM ratio of 20.25. These metrics indicate that Opera is undervalued, especially considering its strong growth trajectory and profitability. With a forward P/E of 9.32, investors are paying less for future earnings compared to many competitors in the tech sector. Furthermore, analysts have set a price target of $24.75, suggesting an additional upside potential of over 27% from the current price, reinforcing its appeal as an investment opportunity.

Opera Growth Potential

Opera’s growth prospects are underpinned by several factors:

1. Market Expansion: The global browser market is expected to grow at a compound annual growth rate (CAGR) of 17.3% from 2024 to 2032, reaching a market size of US$848.11 billion by 2032, with opportunities in emerging markets where Opera already has a strong foothold.
2. AI Integration: Opera’s incorporation of AI-powered tools enhances user experience, driving user engagement and monetization.
3. Cryptocurrency and Fintech: Opera’s crypto-friendly browser and fintech ventures tap into high-growth industries.
4. Diversification: Beyond browsers, Opera’s investments in gaming, advertising, and digital content expand its addressable market.

The company’s ability to innovate and adapt positions it well for sustained long-term growth.

Risks to Consider

While Opera’s outlook is positive, investors should consider the following risks:

• Competitive Pressure: The browser market is dominated by large players like Google and Microsoft, which may limit Opera's market share growth.
• Regulatory Risks: Increasing scrutiny on tech companies globally could affect Opera's operations.
• Currency and Macro Risks: As a company operating across various regions, Opera faces exposure to currency fluctuations and macroeconomic headwinds.

Despite these risks, Opera’s strategic initiatives and robust financials mitigate concerns, making it a compelling investment.

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Conclusion

Opera Limited’s stellar financial performance, promising growth trajectory, and undervaluation present an excellent investment opportunity. Its ability to innovate in AI, fintech, and digital content, coupled with disciplined financial management, positions it to thrive in a competitive landscape. While risks exist, the company’s strong fundamentals and growth prospects make it a stock worth considering for long-term investors.