Amid coronavirus pandemic, it seems to be a wise idea to add Enova International Inc. ENVA to your portfolio. The company — which has strong fundamentals and promising prospects — will see a rise in loan demand, given near-zero interest rates. Solid loan and finance receivable balances will likely continue enhancing the company’s profitability.
The stock has been witnessing upward estimate revisions, reflecting analysts’ optimism about its earnings growth potential. Over the past 60 days, the Zacks Consensus Estimate for 2020 earnings has moved 7.9% upward.
The Zacks Rank #1 (Strong Buy) stock has lost 34.4% over the past six months compared with the industry’s fall of 43.6%.
Factors Favoring Enova International
Revenue growth: Revenue growth remains a key strength for Enova International. The top line witnessed a five-year CAGR of 15.8% (2015-2019), driven by solid loan and finance receivable balances. Also, its projected sales growth rate of 15.3% for 2020 and 11.5% for 2021 indicates continuation of the momentum.
Earnings strength: Over the past three to five years, Enova International’s earnings have increased 14.7%, outperforming the industry average of 12.4%. The uptrend is anticipated to continue as the company’s earnings are projected to be up 13.7% and 13.2% for 2020 and 2021, respectively.
Enova International has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, with the average positive surprise being 11.6%.
The company has a Growth Score of A. Our research shows that stocks with the combination of a Style Score of A or B and a Zacks Rank #1 or 2 (Buy) offer the best upside potential.
Superior Return on Equity (ROE): Enova International’s ROE of 29.98% compares favorably with the industry average of 16.68%. This highlights the company’s commendable position over its peers in using shareholders’ funds.
Stock Seems undervalued: Enova International looks undervalued, with respect to price/earnings (P/E) (F1) and price/sales (P/S) ratios. It has a P/E (F1) ratio of 2.74, which is below the industry average of 3.76. Also, its P/S ratio of 0.33 is lower than the industry average of 0.69.
Additionally, the stock has a Value Score of A. The Value Score condenses all valuation metrics into one actionable score that helps investors steer clear of “value traps” and identify stocks that are truly trading at a discount.
Other Key Picks
Navient Corporation NAVI has witnessed 4.4% upward earnings estimate revision for 2020 over the past 60 days. Nonetheless, the Zacks Rank #2 stock has lost 38.8% over the past six months.
SLM Corporation’s SLM earnings estimates for the current year have moved 11.9% north in the past 60 days. The stock has lost 21.1% over the past six months. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Encore Capital Group, Inc ECPG has witnessed upward earnings estimate revision of 3.7% for 2020 in the past 60 days. This Zacks #2 Ranked stock has declined 17.9% over the past six months.
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