OppFi Q1 Earnings Coming Up: Should You Buy, Sell or Hold the Stock?

Core Viewpoint - OppFi Inc. (OPFI) is expected to report first-quarter 2025 results on May 7, with revenue estimates of $137.7 million, indicating an 8.1% growth year-over-year, and earnings per share estimated at 26 cents, reflecting over 100% growth from the previous year [1] Financial Performance - The company has a strong earnings surprise history, beating the Zacks Consensus Estimate in the last four quarters with an average earnings surprise of 73% [2] - OPFI's Earnings ESP is currently at 0.00%, and it holds a Zacks Rank of 1 (Strong Buy) [3][4] Market Position and Strategy - OppFi's strategy focuses on providing affordable credit to underbanked customers, a market projected to grow at a 13% CAGR, reaching $7 trillion by 2032 [5] - The company targets subprime and non-prime credit holders often overlooked by traditional financial institutions [6] Stock Performance - OppFi shares have increased by 245.3% over the past year, outperforming the industry average of 21.7% and the Zacks S&P 500 composite's 10.7% rise [7] - The stock is currently trading at a trailing 12-month price-to-earnings ratio of 8.70, significantly lower than the industry average of 22.84 and cheaper than peers Corpay and Evertec [10] Operational Efficiency - In Q4 2024, total net originations grew by 11% year-over-year, driven by bank partners expanding into new states and improved lead evaluation capabilities [11] - The proportion of net charge-offs to revenue decreased from 46% to 42%, indicating better asset quality and risk management [12] - The company's machine learning models improved credit evaluation, increasing average yield to 130% from 127% year-over-year [13] - Automated loan approval technology approved 79.5% of loans without human intervention, a 630 basis point increase from the previous year, enhancing cost management [14] Investment Outlook - OppFi is positioned to benefit from bank partnerships and improved risk management through its machine learning models, which reduce losses [15] - The company is fundamentally strong with a discounted valuation, suggesting potential for continued stock price appreciation [17]