OppFi Stock Skyrockets 195% in 6 Months: How Should Investors Play?

Core Viewpoint - OppFi Inc. (OPFI) has experienced a significant stock price increase of 194.6% over the past six months, outperforming its industry and the S&P 500 Composite [1][7]. Group 1: Stock Performance - OPFI's stock is currently trading above its 50-day moving average, indicating a bullish sentiment among investors [4]. - Compared to close competitors, CompoSecure, Inc. (CMPO) and PAR Technology Corporation (PAR), which gained 38.4% and 25.5% respectively, OPFI's performance is notably superior [7]. Group 2: Market Opportunity - There is a rising demand for digital banks, particularly among underbanked customers, with nearly 60 million U.S. consumers identified as credit marginalized, presenting a substantial market opportunity for OppFi [8]. - OPFI can underwrite riskier loans at lower rates than traditional financial institutions, addressing the needs of customers living paycheck to paycheck [9]. Group 3: Valuation and Financial Metrics - OppFi shares are considered undervalued, trading at 13.1 times forward 12-month earnings per share, compared to the industry average of 25.8 times [10]. - The trailing 12-month EV-to-EBITDA ratio for OPFI is 10.1 times, below the industry's average of 14.8 times [10]. - In Q3 2024, OPFI's current ratio of 1.53 exceeds the industry average of 1.24, indicating a strong liquidity position [11]. Group 4: Revenue and Earnings Growth - The Zacks Consensus Estimate for OppFi's revenues in 2024 and 2025 is $520 million and$547.1 million, reflecting year-over-year growth of 2.2% and 5.2% respectively [13]. - The consensus estimate for OPFI's earnings per share for 2024 and 2025 stands at 86 cents and $1, suggesting increases of 68.6% and 16.3% year-over-year [13]. Group 5: Strategic Moves and Risks - OppFi's acquisition of a 35% equity interest in Bitty Advance aims to expand into small business financing, although challenges in scaling and market conditions may pose risks [16][17]. - The ability to underwrite riskier loans could lead to increased charge-offs if consumer creditworthiness declines, impacting the company's bottom line [15].