OneMain Holdings Inc. (OMF) — Fairly Priced With Convincing Growth Indicators
OneMain shares moved 18.0% over the last 52 weeks, with a high of $48.64 and a low of $30.85. During this time, the stock outperformed the S&P 500 index by 7.0%. As of April 2023, the company's 50-day average price is $39.68. OneMain Holdings, Inc., a financial service holding company, engages in the consumer finance and insurance businesses. The mid-cap Finance company has 9,200 full time employees and is based in Evansville, IN. OneMain has returned a 10.6% dividend yield over the last 12 months.
The Company May Be Profitable, but Its Balance Sheet Is Highly Leveraged:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $3,658 | $4,127 | $4,368 | $4,364 | $4,435 | $4,451 |
| Interest Income (MM) | $2,783 | $3,157 | $3,341 | $3,427 | $3,543 | $3,514 |
| Operating Margins | 17.0% | 27.0% | 22.0% | 40.0% | 26.0% | 19.0% |
| Net Margins | 12.0% | 21.0% | 17.0% | 30.0% | 20.0% | 15.0% |
| Net Income (MM) | $447 | $855 | $730 | $1,314 | $878 | $649 |
| Depreciation & Amort. (MM) | $289 | $271 | $264 | $264 | $262 | $262 |
| Earnings Per Share | $3.29 | $6.27 | $5.41 | $9.87 | $7.06 | $5.34 |
| EPS Growth | n/a | 90.58% | -13.72% | 82.44% | -28.47% | -24.36% |
| Diluted Shares (MM) | 136 | 136 | 135 | 133 | 124 | 114 |
| Free Cash Flow (MM) | $2,046 | $2,362 | $2,212 | $2,247 | $2,387 | $2,454 |
| Net Current Assets (MM) | -$14,279 | -$15,962 | -$15,538 | -$17,224 | -$17,670 | -$17,966 |
| Long Term Debt (MM) | $15,178 | $17,212 | $17,800 | $17,750 | $18,281 | $19,195 |
| Net Debt / EBITDA | 15.33 | 11.38 | 12.15 | 8.35 | 12.16 | 15.74 |
OneMain Is Fairly Priced at Current Levels:
Compared to the Finance sector's average of 14.34, OneMain has a trailing twelve month P/E ratio of 7.4 and, according to its EPS guidance of $7.42, an expected P/E ratio of 5.3. The company doesn't issue forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is 8.4%. On this basis, the company's PEG ratio is 0.88, which implies that its shares are underpriced.
The market is giving OneMain a fair value in terms of its book value since its P/B ratio of 1.44 is lower than the sector average, which stands at 1.57. As of the date of publication, the company's shares are trading -35.5% below their Graham number of $56.86.
Analysts Give OneMain an Average Rating of Buy:
13 analysts are following OneMain and have set target prices ranging from $41.0 to $60.0 per share. On average, they have given the company a rating of buy. At the current price of $39.68, OMF is trading -22.3% away from its average analyst target price of $51.08 per share, implying an analyst consensus of strong upside potential for the stock. The company has an average amount of shares sold short since 2.1% of the company's shares are tied to short positions. Institutions own 82.8% of OneMain's shares, while the insider ownership rate stands at 4.47%. which is a decent amount of insider shareholders. The company's biggest shareholder is Vanguard Group Inc with a 10% stake in the company worth $443,366,661.
