On Wednesday, Wells Fargo reiterated its Equal Weight rating on OneMain Holdings Inc (NYSE:OMF), with a consistent price target of $48.00. The firm has raised its first-quarter earnings per share (EPS) estimate for the company to $1.43, which is slightly above the consensus estimate of $1.40.
The adjustment in the EPS forecast, according to the firm, is due to a decrease in provision expenses from a reduced assumed reserve ratio and improved operating expenses. This was partially offset by lower net interest income, as the closure of Foursight occurred later than anticipated.
Wells Fargo also increased its 2024 EPS estimate for OneMain by $0.15 to $5.65, citing similar reasons. However, there was no change to the 2025 EPS projection of $7.65. Additionally, the firm introduced its 2026 EPS estimate of $8.90.
The firm's outlook is buoyed by improving delinquency trends in asset-backed securities (ABS), suggesting that OneMain may present a positive credit narrative during the first-quarter earnings call scheduled for April 30, 2024. Despite these adjustments, the firm's valuation of OneMain's stock remains unchanged at $48, which is based on 6.3 times the projected 2025 earnings.
InvestingPro Insights
As OneMain Holdings Inc (NYSE:OMF) heads towards its first-quarter earnings call, InvestingPro data and tips provide investors with additional context for analyzing the company's performance and stock potential. With a market capitalization of $5.66 billion and a compelling price-to-earnings (P/E) ratio of 8.92, OneMain demonstrates value characteristics that may appeal to certain investors. The company's revenue for the last twelve months as of Q4 2023 stood at $2.559 billion, with a robust gross profit margin of 69.28%, signaling efficient operations.
InvestingPro Tips suggest that OneMain pays a significant dividend to shareholders, with a high dividend yield of 8.05%, and has experienced a large price uptick over the last six months, returning 33.68%. Analysts predict the company will be profitable this year, which is supported by a strong performance over the last twelve months. OneMain's liquid assets also exceed its short-term obligations, indicating a sound liquidity position.
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