Here’s why we think OneMain Holdings (NYSE:OMF) might deserve your attention today

Investors are often driven by the idea of ​​discovering “the next big thing”, even if that means buying “historic stocks” without any income, let alone profit. But the reality is that when a company loses money every year, for long enough, its investors will usually take their share of those losses. Loss-making companies are always in a race against time to achieve financial viability, so investors in these companies may take on more risk than they should.

Despite being in the age of astronomical investing in tech stocks, many investors still adopt a more traditional strategy; buy shares in profitable companies like One Main Holdings (NYSE:OMF). While that doesn’t necessarily mean it’s undervalued, the company’s profitability is enough to warrant some appreciation, especially if it’s growing.

Check out our latest analysis for OneMain Holdings

How fast is OneMain Holdings growing?

Typically, companies experiencing earnings per share (EPS) growth should see similar stock price trends. It therefore makes sense for experienced investors to pay close attention to company EPS when undertaking investment research. To the delight of shareholders, OneMain Holdings has achieved an impressive annual compounded EPS growth of 40% over the past three years. Such rapid growth may well be fleeting, but it should be more than enough to pique the interest of wary stock pickers. It should also be noted that EPS growth was supported by share buybacks, indicating that the company is able to return capital to shareholders.

A careful look at revenue growth and earnings before interest and tax (EBIT) margins can help inform a view on the sustainability of recent earnings growth. Not all OneMain Holdings revenue this year is revenue operations, so keep in mind that the revenue and margin figures used in this article may not be the best representation of the underlying business. OneMain Holdings maintained stable EBIT margins over the past year, while growing revenue 5.9% to $3.3 billion. It is progress.

The graph below shows how the company’s bottom line and top results have grown over time. To see the actual numbers, click on the chart.

NYSE: OMF earnings and revenue history as of June 19, 2022

You don’t drive with your eyes on the rearview mirror, so you might be more interested in that free report showing analyst forecasts for OneMain Holdings coming profits.

Are OneMain Holdings insiders aligned with all shareholders?

Insider interest in a company always sparks a bit of intrigue, and many investors are looking for companies where insiders are putting their money where they say they are. Because often buying stocks is a sign that the buyer considers them undervalued. However, insiders are sometimes wrong and we don’t know the exact logic behind their acquisitions.

The good news for OneMain Holdings is that an insider has illustrated his confidence in the company’s future with a huge stock purchase in the past 12 months. Specifically, in a large transaction, Chairman Douglas Shulman paid US$500,000, for stock at US$58.50 per share. Seeing such conviction in the company is a huge benefit to shareholders and should inspire confidence in their mission.

In addition to insider buying, it’s good to see that OneMain Holdings insiders have a valuable investment in the company. To be precise, they own $18 million worth of stock. It shows strong buy-in and can indicate belief in the business strategy. Although it represents only 0.4% of the company, the value of this investment is enough to show that insiders have a lot to do with the company.

Should you add OneMain Holdings to your watchlist?

OneMain Holdings’ earnings took off quite impressively. The icing on the cake is that insiders own a bunch of stocks, and one buys more. This quick overview suggests that the company may be in good quality, and also at an inflection point, so perhaps OneMain Holdings deserves some timely attention. However, before you get too excited, we found out 4 warning signs for OneMain Holdings (2 make us uncomfortable!) that you should be aware of.

The good news is that OneMain Holdings isn’t the only growth stock to buy insiders. Here’s a list…with insider purchases over the past three months!

Please note that insider trading discussed in this article refers to reportable trading in the relevant jurisdiction.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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