OneMain Holdings Hits 52-Week High: Should You Buy the Stock Now?

Core Insights - OneMain Holdings, Inc. (OMF) shares reached a 52-week high of $60.08, with a 47.8% increase over the past three months, outperforming the industry and S&P 500 Index [1][8] - The company's revenue has shown a five-year compound annual growth rate (CAGR) of 3.6%, driven by growth in net interest income [4] - OneMain Holdings has a trailing 12-month return on equity (ROE) of 19.30%, significantly higher than the industry average of 10.11% [11][12] Revenue Growth - The company aims to enhance margins by reducing Back Book over time and has strengthened its auto finance capabilities through the acquisition of Foursight [5] - OneMain Holdings is expected to continue top-line growth due to its diversified product base and efforts to expand credit card and auto finance businesses [4][5] Financial Position - As of March 31, 2025, OneMain Holdings had total debt of $22.2 billion and cash and cash equivalents of $1.4 billion, indicating a decent balance sheet position [9] - The company has a share repurchase program worth $1 billion, with $609.8 million remaining as of March 31, 2025 [11] Expense Trends - Total other expenses have seen a CAGR of 3% over the last five years, primarily due to rising salaries and benefits [15] - Elevated expenses are expected to persist as the company invests in new products and capabilities [16] Asset Quality Concerns - Provision for finance receivable losses has a CAGR of 9.1% over the past five years, indicating underwriting concerns [19] - The allowance ratio has consistently increased, suggesting challenges in asset quality that may hinder growth [21] Valuation Metrics - OMF stock has a P/E (F1) ratio of 9.68, below the industry average of 11.72, indicating it may be undervalued [22] - Despite the attractive valuation, analysts have revised earnings estimates lower for 2025 and 2026, reflecting concerns over growth potential [25]