Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving ...

Core Insights - The Zacks Consumer Loans industry is experiencing a positive outlook due to falling interest rates and easing lending standards, which are expected to sustain and boost loan demand, leading to modest growth in revenues [1][4]. Industry Overview - The Zacks Consumer Loans industry includes companies that provide various loan products such as mortgages, credit card loans, and personal loans, generating net interest income (NII) as a primary revenue source [3]. - The industry's performance is closely tied to the overall economic conditions and consumer sentiments, with many companies diversifying their revenue through services like commercial lending and insurance [3]. Major Influencing Themes - **Interest Rates & Loan Demand**: The Federal Reserve has lowered interest rates by 25 basis points and indicated further cuts, which is expected to keep loan demand steady and improve net interest margins (NIM) and NII [4]. - **Lending Standards**: Improved credit scores and looser lending criteria are expanding the borrower base, aiding consumer loan providers in meeting loan demand [5]. - **Asset Quality**: Falling interest rates are likely to enhance borrowers' repayment capacity, although a slight increase in non-performing loans is anticipated [6]. Industry Performance - The Zacks Consumer Loans industry ranks 87 among over 250 Zacks industries, placing it in the top 36% and indicating potential outperformance in the near term [7][8]. - Over the past two years, the industry has outperformed the Zacks S&P 500 composite and the Zacks Finance sector, with a collective increase of 127.6% compared to 56.9% and 51.2% for the S&P 500 and Finance sector, respectively [11]. Valuation Metrics - The industry has a trailing 12-month price-to-tangible book ratio (P/TBV) of 1.13X, above the five-year median of 1.02X, and is trading at a significant discount compared to the S&P 500's P/TBV of 13.68X [14][16]. Investment Opportunities - **Capital One Financial Corporation (COF)**: Focused on consumer and commercial lending, with a market cap of $135.5 billion. The company is expected to see modest improvements in NII and NIM due to anticipated interest rate cuts, with a projected earnings growth of 22.1% for 2025 [19][21][22]. - **Encore Capital Group, Inc. (ECPG)**: Specializes in debt recovery services, with a market cap of $981.9 million. The company is expected to benefit from rising delinquency rates and improved collections as interest rates decline, with earnings projected to jump 63.3% this year [24][26][27].

Core Viewpoint - OneMain Holdings (OMF) is currently viewed as a more attractive investment option compared to Sallie Mae (SLM) for value investors based on various financial metrics and rankings [1][3][7] Valuation Metrics - OMF has a forward P/E ratio of 9.60, while SLM has a slightly higher forward P/E of 9.61 [5] - The PEG ratio for OMF is 0.47, indicating better expected EPS growth relative to its price compared to SLM's PEG ratio of 0.84 [5] - OMF's P/B ratio stands at 2.19, which is lower than SLM's P/B ratio of 2.93, suggesting OMF is more favorably valued in terms of market value versus book value [6] Earnings Outlook - OMF holds a Zacks Rank of 2 (Buy), indicating a positive earnings outlook with recent revisions to earnings estimates, while SLM has a Zacks Rank of 3 (Hold) [3][7] - The stronger estimate revision activity for OMF further supports its position as a superior choice for value investors [7] Value Grades - OMF has received a Value grade of A, while SLM has a Value grade of C, reflecting OMF's more attractive valuation metrics [6]

Company Overview - Ally Financial Inc. (ALLY) is experiencing significant attention from investors due to high implied volatility in the options market, particularly the Sept 19, 2025 $21.00 Put option [1] Implied Volatility Insights - Implied volatility indicates the market's expectation of future price movement, suggesting that investors anticipate a significant price change for Ally Financial [2] - High implied volatility may signal an upcoming event that could lead to a substantial rally or sell-off [2] Analyst Sentiment - Ally Financial holds a Zacks Rank 3 (Hold) in the Financial - Consumer Loans industry, which is in the top 40% of the Zacks Industry Rank [3] - Over the past 60 days, four analysts have raised their earnings estimates for the current quarter, while four have lowered theirs, resulting in a consensus estimate decrease from $1.01 to $0.99 per share [3] Trading Strategy Implications - The high implied volatility could indicate a developing trading opportunity, as options traders often seek to sell premium on options with elevated implied volatility [4] - This strategy aims to benefit from the decay of options value, with the expectation that the underlying stock will not move as much as anticipated by the market [4]

Core Insights - Navient reported second-quarter 2025 adjusted earnings per share (EPS) of 21 cents, missing the Zacks Consensus Estimate of 29 cents and down from 48 cents in the prior-year quarter [2] - The company's GAAP net income was $14 million compared to $36 million in the prior-year quarter [3] - The decline in net interest income (NII) and higher provisions for loan losses were significant factors affecting performance [2][4] Financial Performance - NII decreased by 3.7% year over year to $131 million, missing estimates by 9.2% [4] - Total other income fell 76.1% year over year to $28 million [4] - Provision for loan losses increased to $37 million from $14 million in the prior-year quarter [4] - Total expenses decreased by 45.4% year over year to $101 million [4] Segment Performance - Federal Education Loans segment generated a net income of $30 million, up 7.1% year over year [5] - Consumer Lending segment reported a net income of $26 million, down 56.7% from the year-ago quarter [5] - The private education loan delinquency rate greater than 30 days increased to 6.4% from 5.2% in the prior-year quarter [5] Liquidity and Capital Management - As of June 30, 2025, the company had $712 million in total unrestricted cash and liquid investments [8] - In the second quarter, Navient paid $16 million in common stock dividends and repurchased shares for $35 million [9] 2025 Outlook - Core EPS is now expected to be in the range of $0.95–$1.05, down from the previous range of $1.00–$1.20 [10] - FFELP segment NIM is now expected to be 55–65 basis points, an increase from the previous guidance of 45–60 basis points [10] - Full-year loan originations are now expected to be between $1.8 billion and $2.2 billion, compared to earlier expectations of 30% growth [11] Market Sentiment - Since the earnings release, there has been a downward trend in estimates revision, with a consensus estimate shift of -8.74% [12] - Navient has a subpar Growth Score of D and a value score of B, resulting in an aggregate VGM Score of D [13] - The stock has a Zacks Rank 4 (Sell), indicating expectations of below-average returns in the coming months [14] Industry Comparison - Navient belongs to the Zacks Financial - Consumer Loans industry, where Capital One has gained 5.7% over the past month [15] - Capital One reported revenues of $12.49 billion, representing a year-over-year change of +31.4% [15] - The overall direction of estimate revisions for Capital One translates into a Zacks Rank 2 (Buy) [17]

Core Viewpoint - Mr. Cooper Group's recent earnings report showed mixed results, with adjusted earnings per share missing estimates but year-over-year growth in net income and revenues [2][3]. Financial Performance - Adjusted earnings per share for Q2 2025 were $3.13, missing the Zacks Consensus Estimate by 6%, but up 24.2% year over year [2]. - Total revenues increased by 4.3% year over year to $608 million, but fell short of consensus estimates by 13.6% [3]. - Total expenses rose by 10% year over year to $330 million, impacting overall profitability [3]. Segmental Performance - The Servicing segment reported a pre-tax operating income of $332 million, up 15.3% year over year, despite total revenues falling 4.8% to $434 million [4]. - The Originations segment saw a pre-tax operating income of $64 million, a significant increase of 68.4% year over year, with total revenues rising 47.7% to $158 million [5]. Financial Position - As of June 30, 2025, total assets were $18.5 billion, slightly up from $18.4 billion at the end of Q1 2025 [6]. - Total liabilities decreased to $13.4 billion from $13.6 billion in the previous quarter, while total shareholders' equity rose to $5.1 billion from $4.9 billion [7]. Market Sentiment - There has been a downward trend in fresh estimates, with the consensus estimate shifting down by 5.98% [8]. - Mr. Cooper currently holds a Zacks Rank of 4 (Sell), indicating expectations of below-average returns in the coming months [11]. Industry Comparison - Mr. Cooper is part of the Zacks Financial - Consumer Loans industry, where Ally Financial reported a year-over-year revenue increase of 4.1% [12]. - Ally Financial has a Zacks Rank of 3 (Hold) and is expected to post earnings growth of 4.2% for the current quarter [13].

Core Viewpoint - Credit Acceptance (CACC) is anticipated to report a year-over-year increase in earnings driven by higher revenues, with a consensus outlook suggesting a significant earnings surprise could impact its stock price [1][3]. Earnings Expectations - The consensus estimate for Credit Acceptance's quarterly earnings is $9.84 per share, reflecting a year-over-year increase of +356.9% [3]. - Expected revenues for the quarter are projected at $585 million, which is an 8.7% increase from the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating that analysts have not significantly altered their initial projections [4]. - The Most Accurate Estimate for Credit Acceptance is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -1.02%, suggesting a bearish outlook from analysts [11]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive or negative reading can predict the likelihood of an earnings beat or miss, with a positive ESP being a strong indicator of an earnings beat [8][9]. - Credit Acceptance currently holds a Zacks Rank of 5, which complicates the prediction of an earnings beat [11]. Historical Performance - In the last reported quarter, Credit Acceptance was expected to post earnings of $10.31 per share but only achieved $8.66, resulting in a surprise of -16.00% [12]. - Over the past four quarters, the company has only beaten consensus EPS estimates once [13]. Industry Comparison - OneMain Holdings (OMF), another player in the financial consumer loans industry, is expected to report earnings of $1.25 per share, reflecting a year-over-year change of +22.6% [17]. - OneMain's revenues are projected at $1 billion, also an 8.7% increase from the previous year, but it has an Earnings ESP of -0.89% [18].

Group 1: OneMain Holdings (OMF) Earnings Expectations - Wall Street anticipates a year-over-year increase in earnings for OneMain Holdings, with expected earnings of $1.25 per share, reflecting a +22.6% change, and revenues projected at $1 billion, up 8.7% from the previous year [3][12] - The earnings report is set to be released on July 25, and the stock may rise if actual results exceed expectations, while a miss could lead to a decline [2][12] - The consensus EPS estimate has been revised 1.22% higher in the last 30 days, indicating a reassessment by analysts [4] Group 2: Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that the Most Accurate Estimate for OneMain is lower than the consensus estimate, resulting in an Earnings ESP of -0.89%, suggesting a bearish outlook [12] - A positive Earnings ESP is generally a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [10] - OneMain currently holds a Zacks Rank of 3, making it challenging to predict a consensus EPS beat [12] Group 3: Historical Performance and Industry Context - OneMain has beaten consensus EPS estimates in the last four quarters, with a notable surprise of +10.97% in the last reported quarter [13][14] - In comparison, Enova International, a peer in the consumer loans industry, is expected to post earnings of $2.97 per share, indicating a +34.4% year-over-year change, with revenues projected at $751.04 million, up 19.5% [18][19] - Enova International has a positive Earnings ESP of +0.67% and a Zacks Rank of 2, suggesting a higher likelihood of beating consensus estimates [20]

Core Viewpoint - The market anticipates a year-over-year decline in Navient's earnings despite an increase in revenues when it reports its results for the quarter ended June 2025 [1] Company Summary - Navient is expected to report quarterly earnings of $0.29 per share, reflecting a year-over-year decrease of 39.6% [3] - Revenue projections stand at $142.8 million, which is a 5% increase from the same quarter last year [3] - The consensus EPS estimate has been revised down by 3.94% over the last 30 days, indicating a bearish sentiment among analysts [4] Earnings Surprise Prediction - The Most Accurate Estimate for Navient is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -17.22% [12] - The stock currently holds a Zacks Rank of 3, making it challenging to predict a beat on the consensus EPS estimate [12] - Historically, Navient has beaten consensus EPS estimates in the last four quarters, with a notable surprise of +47.37% in the last reported quarter [13][14] Industry Context - In comparison, Capital One is expected to post earnings of $3.83 per share for the same quarter, indicating a year-over-year increase of 22% [18] - Capital One's revenue is projected to be $12.22 billion, up 28.6% from the previous year, with a slight upward revision of 0.6% in the consensus EPS estimate over the last 30 days [19] - Capital One also has an Earnings ESP of -1.47% and a Zacks Rank of 3, complicating predictions for beating the consensus EPS estimate [20]

Core Viewpoint - Capital One (COF) is anticipated to report a year-over-year increase in earnings and revenues for the quarter ended June 2025, with earnings per share (EPS) expected to be $3.82, reflecting a +21.7% change, and revenues projected at $12.22 billion, up 28.6% from the previous year [3]. Group 1: Earnings Expectations - The upcoming earnings report is scheduled for July 22, and the stock may rise if the reported numbers exceed expectations, while a miss could lead to a decline [2]. - The consensus EPS estimate has been revised 1.43% higher in the last 30 days, indicating a positive reassessment by analysts [4]. - The Most Accurate Estimate for Capital One is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -2.26%, suggesting a bearish outlook from analysts [12]. Group 2: Historical Performance - In the last reported quarter, Capital One exceeded the expected EPS of $3.66 by delivering $4.06, resulting in a surprise of +10.93% [13]. - Over the past four quarters, Capital One has beaten consensus EPS estimates three times [14]. Group 3: Comparison with Industry Peers - Ally Financial (ALLY) is expected to report an EPS of $0.78 for the same quarter, indicating a year-over-year decline of -19.6%, with revenues projected at $2.03 billion, up 1.5% [18]. - The consensus EPS estimate for Ally Financial has been revised 1.2% lower, but a higher Most Accurate Estimate gives it an Earnings ESP of +1.78%, suggesting a likely beat of the consensus EPS estimate [19][20].