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Are Investors Undervaluing OneMain Holdings (OMF) Right Now?

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·3 min read
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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company to watch right now is OneMain Holdings (OMF). OMF is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 6.14. This compares to its industry's average Forward P/E of 9.22. Over the last 12 months, OMF's Forward P/E has been as high as 10.86 and as low as 2.06, with a median of 6.42.

We also note that OMF holds a PEG ratio of 0.71. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. OMF's PEG compares to its industry's average PEG of 0.96. Within the past year, OMF's PEG has been as high as 0.80 and as low as 0.21, with a median of 0.62.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. OMF has a P/S ratio of 0.91. This compares to its industry's average P/S of 0.96.

Finally, investors will want to recognize that OMF has a P/CF ratio of 4.45. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 4.46. Within the past 12 months, OMF's P/CF has been as high as 5.91 and as low as 1.74, with a median of 4.49.

These are only a few of the key metrics included in OneMain Holdings's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, OMF looks like an impressive value stock at the moment.


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