On Friday, RBC Capital reiterated its Outperform rating on OneMain (NYSE:OMF), with a steady price target of $61.00. The firm analyzed OneMain's recently released Asset-Backed Securities (ABS) trust data for June, noting an uptick in delinquencies.
The data revealed that OneMain's OMFIT ABS trusts' 30-89 day delinquencies rose by 18 basis points month-over-month. This increment is slightly higher compared to the pre-pandemic seasonal average, which saw a month-over-month increase of 12 basis points in the percentage of loan basis for June.
The rise in delinquencies, as observed by RBC Capital, is a deviation from the historical trends usually expected for the month. Despite this, the firm's stance on OneMain's stock remains positive, with no change in the price target.
OneMain's ABS trust data is a key indicator of the financial health of the loans within its portfolio. The 30-89 day delinquency rate is a measure of the loans that are late on payments but not yet classified as serious delinquencies, which typically cover payments late by 90 days or more.
The reiterated Outperform rating indicates that RBC Capital expects OneMain's stock to perform better than the average total return of the stocks covered by the firm over the next 12 to 18 months. The $61.00 price target set by RBC Capital remains unchanged following the analysis of the June ABS trust data.
In other recent news, OneMain Holdings (NYSE:OMF) Inc., a key player in the consumer finance sector, has been the focus of multiple analyses due to its strong credit performance and strategic positioning in the nonprime lending market.
Several firms have revised their outlook on the company, with RBC Capital Markets, BMO Capital Markets, Wells Fargo (NYSE:WFC), and TD Cowen all raising their price targets for OneMain. The improved ratings reflect the company's robust credit metrics, promising financial outlook, and potential for capital generation.
Analysts have highlighted OneMain's decline in 30-89 day delinquencies, aggressive capital return actions, and a comprehensive product suite catering to a large nonprime customer base as key drivers of its favorable outlook. The company's earnings per share (EPS) are expected to reach $5.73 for the first fiscal year and $7.80 for the second, according to analyst projections.
Despite operating in a neutral industry environment and facing potential market saturation, OneMain has been able to carve out a niche in the consumer finance market. Its strategy of being the preferred lender for nonprime borrowers and its potential for capital generation have been underscored by analysts as central to its positive outlook.
InvestingPro Insights
In light of RBC Capital's positive outlook on OneMain (NYSE:OMF), it's worth noting that the company's fundamentals, as reflected in real-time data from InvestingPro, provide a broader picture of its financial health. OneMain's market capitalization stands at a robust $6.17 billion, and the stock is currently trading with a price-to-earnings (P/E) ratio of 10.01, aligning with the adjusted P/E for the last twelve months as of Q1 2024. Additionally, investors may find the dividend yield of 8.08% particularly attractive, as it suggests a significant return to shareholders.
InvestingPro Tips highlight that analysts predict OneMain to be profitable this year, a sentiment supported by its performance over the last twelve months. The company has demonstrated a strong return over the past five years, which may reassure investors looking for stability and growth. For those interested in more detailed analysis and additional tips, there are 6 more InvestingPro Tips available for OneMain, which can be accessed for further guidance on investing decisions. To benefit from these insights, use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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