Do OneMain Holdings's (NYSE:OMF) Earnings Warrant Your Attention?

Some have more dollars than sense, they say, so even companies that have no revenue, no profit, and a record of falling short, can easily find investors. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses.

So if you're like me, you might be more interested in profitable, growing companies, like OneMain Holdings (NYSE:OMF). While that doesn't make the shares worth buying at any price, you can't deny that successful capitalism requires profit, eventually. Loss-making companies are always racing against time to reach financial sustainability, but time is often a friend of the profitable company, especially if it is growing.

Check out our latest analysis for OneMain Holdings

How Fast Is OneMain Holdings Growing?

If a company can keep growing earnings per share (EPS) long enough, its share price will eventually follow. It's no surprise, then, that I like to invest in companies with EPS growth. Who among us would not applaud OneMain Holdings's stratospheric annual EPS growth of 46%, compound, over the last three years? Growth that fast may well be fleeting, but like a lotus blooming from a murky pond, it sparks joy for the wary stock pickers.

I like to see top-line growth as an indication that growth is sustainable, and I look for a high earnings before interest and taxation (EBIT) margin to point to a competitive moat (though some companies with low margins also have moats). I note that OneMain Holdings's revenue from operations was lower than its revenue in the last twelve months, so that could distort my analysis of its margins. OneMain Holdings maintained stable EBIT margins over the last year, all while growing revenue 33% to US$3.4b. That's a real positive.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.

While we live in the present moment at all times, there's no doubt in my mind that the future matters more than the past. So why not check this interactive chart depicting future EPS estimates, for OneMain Holdings?

Are OneMain Holdings Insiders Aligned With All Shareholders?

Like the kids in the streets standing up for their beliefs, insider share purchases give me reason to believe in a brighter future. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

First things first; I didn't see insiders sell OneMain Holdings shares in the last year. Even better, though, is that the Chairman, Douglas Shulman, bought a whopping US$677k worth of shares, paying about US$57.26 per share, on average. To me that means at least one insider thinks that the company is doing well - and they are backing that view with cash.

On top of the insider buying, it's good to see that OneMain Holdings insiders have a valuable investment in the business. Indeed, they have a glittering mountain of wealth invested in it, currently valued at US$238m. I would find that kind of skin in the game quite encouraging, if I owned shares, since it would ensure that the leaders of the company would also experience my success, or failure, with the stock.

Should You Add OneMain Holdings To Your Watchlist?

OneMain Holdings's earnings per share have taken off like a rocket aimed right at the moon. The cherry on top is that insiders own a bunch of shares, and one has been buying more. Because of the potential that it has reached an inflection point, I'd suggest OneMain Holdings belongs on the top of your watchlist. It is worth noting though that we have found 3 warning signs for OneMain Holdings (2 are a bit concerning!) that you need to take into consideration.

As a growth investor I do like to see insider buying. But OneMain Holdings isn't the only one. You can see a a free list of them here.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.