OMF: Future Results Will Reflect Improved Profitability and Stable Credit Trends

Analysts have raised their price target for OneMain Holdings by approximately $2, now valuing shares at $66.21. They cite stronger profit margins, an improved capital return outlook, and recent positive Q3 results.

Analyst Commentary

Recent Street Research provides a range of perspectives on OneMain Holdings, with analysts weighing both optimistic outlooks and potential headwinds following the company’s positive third-quarter results.

• Bullish analysts have increased price targets, citing stronger profit margins and consistent top-line beats. These factors indicate effective execution and steady revenue growth.
• There is an improving outlook for capital returns as management appears ready to accelerate both dividends and share buybacks. This is supported by significant excess capital generation.
• Stable credit trends and a positive origination growth outlook highlight the company's operational stability. This has been further enhanced by recent investments in product and technology initiatives.
• Lower funding costs and improved scale in the business suggest further upside to future profitability and valuation.

• Bearish analysts have expressed caution regarding the potential for incremental headwinds if balance sheets for low-income consumers deteriorate. This could impact loan performance and the overall risk profile.
• Although the company has addressed issues with its 2022 loan vintages and adopted a new lending model, uncertainties remain around the effectiveness of these measures in a shifting macroeconomic environment.
• Some analysts have maintained neutral ratings, noting that while there has been progress on execution and guidance, further upside may be limited by external credit risks.

What's in the News

• The company announced a new share repurchase program, authorizing up to $1 billion in buybacks to be completed by December 31, 2028 (Key Developments).
• Between July 1 and September 30, 2025, the company repurchased 539,574 shares for $32.25 million, bringing the total to over 10.36 million shares and $443.6 million since February 2022 under the ongoing buyback plan (Key Developments).
• The company declared an increase in its quarterly dividend to $1.05 per share, up 1% from the prior quarter, payable on November 14, 2025 (Key Developments).
• The company reported net charge-offs of $427 million for the third quarter ended September 30, 2025, slightly down from $431 million in the previous year (Key Developments).
• The Board of Directors authorized a new buyback plan on October 23, 2025 (Key Developments).

Valuation Changes

• Fair Value has risen slightly from $64.21 to $66.21. This reflects a positive reassessment of the company’s underlying worth.
• The Discount Rate increased marginally from 12.32% to 12.5%, suggesting a modest adjustment in the risk premium applied to forecasts.
• Revenue Growth projections have decreased slightly from 34.48% to 33.88%.
• Net Profit Margin has improved from 17.99% to 19.27%, indicating expectations for stronger profitability.
• The Future P/E ratio has declined from 8.82x to 7.96x, pointing to a more attractive valuation based on forecast earnings.