OneMain Holdings, Inc. OMF remains well poised for top-line growth, driven by robust consumer loan demand. Thus, it seems to be a wise idea to add the stock to your portfolio now.
In fact, the Zacks Consensus Estimate for earnings has been revised 6.9% and 4.7% upward for 2019 and 2020, respectively over the past 60 days. This reflects analysts’ optimism regarding the company’s earnings growth potential. Thus, the stock currently sports a Zacks Rank #1 (Strong Buy).
Further, the company’s price performance looks impressive. The stock has rallied 47.6% so far this year, outperforming 26.8% growth recorded by the industry.
What Makes Onemain Holdings an Attractive Investment Option
Revenue strength: Onemain Holdings continues to record decent organic growth. The company’s revenues have witnessed a five-year (2014-2018) CAGR of 11.7%, driven mainly by robust loan origination volume. Moreover, given the continued rise in demand for consumer loans and improving economy, the company’s top line is expected to rise further.
Its projected sales growth rate of 4.8% for 2019 and 6.8% for 2020 indicates constant upward momentum in revenues.
Earnings growth: Onemain Holdings witnessed earnings growth of 23.8% over the past three-five years, significantly above the industry average of 9.3%. This uptrend is likely to continue in the near term as reflected by its projected earnings growth rate of 20.2% and 5.6% for 2019 and 2020, respectively.
Notably, the company recorded an average positive earnings surprise of 7.7% over the trailing four quarters.
Further, the company’s long-term (three to five years) expected earnings growth rate of 10% promises rewards for shareholders.
Superior Return on Equity (ROE): Onemain Holdings’ ROE is 19.99%, higher than the industry average of 13.60%. This indicates that the company reinvests its cash more efficiently than the industry.
Stock seems undervalued: Onemain Holdings seems undervalued when compared with the broader industry. Its current price-book and price-earnings (F1) ratios are lower than the respective industry averages.
Also, the stock has a Value Score of A. Our research shows that stocks with a Style Score of A or B when combined with a Zacks Rank #1 or 2 (Buy) offer the best upside potential.
Other Stocks Worth a Look
The Zacks Consensus Estimate for Ally Financial ALLY has moved 3.3% upward for 2019 in the past 60 days. Shares of this Zacks Rank #2 company have returned 38.3% year to date.
The Zacks Consensus Estimate for Navient Corporation NAVI has been revised 14.5% upward for 2019 in the past 60 days. Its share price has surged 44.4% so far this year. The stock sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for Credit Acceptance Corporation CACC has been revised 2.2% upward for 2019 in the past 60 days. The company’s share price has rallied 18.6% so far this year. The company has a Zacks Rank of 2.
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OneMain Holdings, Inc. (OMF) : Free Stock Analysis Report
Navient Corporation (NAVI) : Free Stock Analysis Report
Ally Financial Inc. (ALLY) : Free Stock Analysis Report
Credit Acceptance Corporation (CACC) : Free Stock Analysis Report
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