Opera Limited (OPRA) is a Zacks Rank #1 (Strong Buy) that has a C for Value and a D for Growth.  The company makes the Opera web browser and AI driven content.  The company has beaten the Zacks Consensus Estimate in three of the last four quarters and has come in recent highs.  Let’s explore more about why this stock is the Bull of the Day.

Description                      

Opera Ltd. engages in the provision of web browsers through its subsidiaries. Its products include Opera browser for Windows, iOS, and Linux computers, as well as the mobile apps Opera for Android, Opera Mini, Opera Touch, and Opera News. The company operates through the Browser and News; and Other segments. The Browser and News segment includes PC and mobile browsers, gaming portals and game development tools, News content recommendation products, and audience extension allowing advertisers to take advantage of advertising network on third party inventories. The Other segment comprises of licensing of proprietary technology to third parties and provisions of related maintenance, support and hosting services, provision of professional services, and provision of customized browser configurations to mobile operators. Opera was founded in 1995 and is headquartered in Oslo, Norway.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

Opera Limited (OPRA) has a good earnings history with the company topping the Zacks Consensus Estimate in three of the last four quarters. 

The most recent earnings print saw the company post EPS of 32 cents when the consensus was at 23 cents.  That 9 cent beat translates into a positive earnings surprise of 39.1%

Over the last four quarters the average earnings surprise works out to be 17.2%.

Earnings Estimates Revisions

Earnings estimate revisions is what the Zacks Rank is all about. 

Estimates are moving higher for Opera Limited (OPRA).

Following the recent beat, the estimates for this quarter moved up to $0.26 from $0.21 over the last 30 days.

Next quarter is has increased from $0.23 to $0.29 over the same period.

The full year 2025 estimate is up from $0.95 to $1.25.

Next year jumped from $1.27 to $1.61.

Growth

I see revenue in 2025 will come in around $568M which will end up being growth of about 18.2%.

2026 is calling for sales of $656M which represents 15.6% growth.

Valuation

The forward PE stands at 14x which rather low given the steady growth.  The price to book multiple is 1.67x and values investors are always looking for stocks with a P/B multiple of less than 3x.  Price to sales at 3.26x is where you would expect it to be for a company like this.

Break Up Google?

Alphabet is the parent company of Google and there has been some talk of breaking the company up.  This would be a very good development for Opera as the managers of the search business would likely get more aggressive and pay more for the traffic that OPRA sends to search engines.

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This article originally published on Zacks Investment Research (zacks.com).

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