OneMain (NYSE:OMF) Issues Earnings Results, Misses Estimates By $0.05 EPS

Key Points

• OneMain reported quarterly EPS of $1.51, missing analysts’ $1.56 consensus estimate by $0.05 and declining from $1.90 a year earlier. The stock fell 4.7% to $56.56.
• Receivables grew 9% year over year to $28.1 billion, originations rose 17%, and management raised its full-year managed-receivables growth outlook to the high end of 9%.
• Credit performance and shareholder returns remained strong: delinquencies and charge-offs improved, quarterly capital generation increased to $284 million, and the company returned more than $500 million to shareholders year to date.

OneMain (NYSE:OMF - Get Free Report) released its quarterly earnings data on Friday. The financial services provider reported $1.51 EPS for the quarter, missing analysts' consensus estimates of $1.56 by ($0.05), Zacks reports. OneMain had a return on equity of 23.49% and a net margin of 13.92%. During the same period last year, the company posted $1.90 earnings per share.

Here are the key takeaways from OneMain's conference call:

• Receivables growth accelerated 9% year over year to $28.1 billion, while originations increased 17%. Management raised its full-year managed-receivables growth outlook to the high end of its prior range, or 9%.
• Credit trends improved across the portfolio. Consumer-loan delinquencies and charge-offs declined sequentially and year over year, with management expecting lower year-over-year losses in the fourth quarter and further normalization toward approximately 7% in 2027, assuming a stable macroeconomic environment.
• The credit-card and auto businesses continued to scale rapidly. Credit-card originations rose 84%, purchase volume increased 82%, and receivables reached $1.4 billion, while auto receivables grew 16%; card charge-offs also fell 274 basis points year over year to 13.9%.
• Capital generation and shareholder returns remained strong. Quarterly capital generation rose 4% to $284 million, the company returned more than $500 million to shareholders year to date through dividends and repurchases, and management said incremental capital returns will increasingly favor buybacks while maintaining the current dividend.
• OneMain strengthened liquidity with $2.3 billion of ABS and unsecured debt issuance at attractive spreads, but funding costs are expected to remain around current levels and the overall reserve ratio is projected to rise to approximately 11.8% in the fourth quarter as the higher-reserve credit-card portfolio grows.

OneMain Trading Down 4.7%

OneMain stock traded down $2.78 during mid-day trading on Friday, hitting $56.56. The stock had a trading volume of 1,294,667 shares, compared to its average volume of 1,210,612. OneMain has a 12 month low of $45.78 and a 12 month high of $71.93. The stock has a market capitalization of $6.51 billion, a PE ratio of 8.52, a P/E/G ratio of 0.65 and a beta of 1.24. The stock has a 50-day simple moving average of $59.13 and a two-hundred day simple moving average of $58.51.

Analysts Set New Price Targets

Several equities analysts recently weighed in on OMF shares. Bank of America cut their price objective on OneMain from $71.00 to $67.00 and set a "buy" rating for the company in a research report on Monday, September 28th. Royal Bank Of Canada cut their price target on OneMain from $73.00 to $71.00 and set an "outperform" rating for the company in a report on Friday, October 16th. TD Cowen lowered their price objective on shares of OneMain from $68.00 to $66.00 and set a "buy" rating on the stock in a research note on Tuesday, October 6th. JPMorgan Chase & Co. cut their target price on shares of OneMain from $60.00 to $52.00 and set an "underweight" rating for the company in a research note on Monday, October 12th. Finally, Deutsche Bank Aktiengesellschaft reissued a "buy" rating on shares of OneMain in a report on Friday, July 10th. Eight equities research analysts have rated the stock with a Buy rating, four have given a Hold rating and one has assigned a Sell rating to the stock. Based on data from MarketBeat.com, the company currently has an average rating of "Moderate Buy" and a consensus target price of $67.09.

Insiders Place Their Bets

In other OneMain news, COO Micah Conrad sold 5,000 shares of the stock in a transaction dated Tuesday, August 4th. The stock was sold at an average price of $65.40, for a total value of $327,000.00. Following the completion of the sale, the chief operating officer directly owned 91,250 shares in the company, valued at $5,967,750. This represents a 5.19% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is available through the SEC website. 0.29% of the stock is owned by insiders.

About OneMain

OneMain Holdings, Inc, operating under the OneMain Financial brand, is a consumer finance company that provides personal lending and related financial services primarily to non-prime consumers in the United States. The company serves customers through a combination of branch locations, online and mobile channels, and centralized customer service operations.

OneMain's principal products include secured and unsecured personal loans, which customers may use for debt consolidation, home improvements, major purchases, and other personal expenses.

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