On Wednesday, Deutsche Bank updated its outlook on OneMain (NYSE:OMF), increasing the stock price target to $64 from the previous $62 while maintaining a Buy rating on the stock. The firm's assessment followed OneMain's first-quarter results, which showcased stronger-than-expected performance.
OneMain's adjusted earnings per share (EPS) for the first quarter was reported at $1.45, surpassing both the consensus estimate of $1.39 and Deutsche Bank's own estimate of $1.37. The company's financial outcomes indicated a positive trend, but the analyst highlighted that investor attention swiftly shifted to other aspects of the company's report.
Particularly, delinquencies were a focal point, as they performed better than market expectations and typical seasonal patterns. This improvement in delinquencies is a significant aspect of OneMain's current financial narrative, according to the analyst's observations.
The analyst pointed out the distinct nature of OneMain's loan portfolio, which is split between older loans issued before August 2022—accounting for 30% of the portfolio and half of the delinquencies—and newer loans issued after that date. The newer segment of the loan portfolio, referred to as the front-book, is showing results that align with expectations.
The ongoing performance of OneMain's front-book, coupled with the diminishing impact of the older, back-book loans, is contributing to the overall positive credit metrics of the company. The analyst's remarks indicate that this trend is a key driver in the decision to raise the price target for OneMain's shares while reaffirming the Buy rating.
InvestingPro Insights
Following the positive assessment by Deutsche Bank, current InvestingPro data and tips provide further context to OneMain's (NYSE:OMF) financial narrative. With a market capitalization of $6.24 billion and a P/E ratio that stands at an attractive 9.81, OneMain presents as a company with a solid valuation foundation.
The company's revenue for the last twelve months as of Q4 2023 was reported at $2.559 billion, although it experienced a slight revenue decline of 8.51% during the same period.
InvestingPro Tips highlight that OneMain pays a significant dividend to shareholders, with a high yield of 7.68% as of the latest data, coupled with a dividend growth of 5.26%. This is a compelling factor for income-focused investors.
Moreover, the company's stock has experienced a large price uptick over the last six months, delivering a total return of 50.36%, and is trading near its 52-week high, at 97.15% of the peak price.
For investors seeking more comprehensive analysis, there are additional InvestingPro Tips available, which can be accessed through the InvestingPro platform. Use coupon code PRONEWS24 for an additional 10% off a yearly or biyearly Pro and Pro+ subscription to gain in-depth insights into OneMain's performance and future prospects.
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