Is OneMain Holdings (OMF) now a solid choice for value investors?

Value investing is undoubtedly one of the most popular methods for finding great stocks in any market environment. After all, who wouldn’t want to find stocks that either fly under the radar and represent attractive buying opportunities or offer tempting discounts compared to fair value?

One way to find these companies is to look at several key metrics and financial ratios, many of which are critical when selecting value stocks. OneMain Holdings, IncInclude OMF stock in this equation and find out if it’s a good choice for value investors right now, or if investors following this methodology should look elsewhere for top picks:

P/E

One important metric that value investors always look at is the price-to-earnings ratio (or P/E ratio for short). It tells us how much investors are willing to pay for each dollar of earnings from a given stock and is undoubtedly one of the most popular financial metrics in the world. The P/E ratio is best used to compare the stock’s current P/E ratio to: a) the previous P/E ratio, b) the industry average, and c) the overall market.

In this regard, OneMain Holdings has a trailing twelve-month P/E ratio of 7.07, as you can see from the chart below:

This level is actually cheap compared to the overall market, as the P/E ratio for the S&P 500 is around 19.27. If we focus on the long-term P/E trend, OneMain Holdings’ current P/E is below its five-year median of 8.01, with the number increasing sharply in recent months. However, the current level is below the stock’s highs, suggesting this can be a solid entry point.

In addition, the stock’s P/E ratio also compares favorably to the Zacks Finance Market sector’s trailing-twelve-month P/E ratio of 14.25, which at least suggests that the stock is currently relatively undervalued compared to its peers.

We should also point out that OneMain Holdings has a P/E (price-to-earnings ratio relative to this year’s earnings) of 6.71, so it’s safe to assume that OneMain Holding’s stock could see a somewhat more value-oriented performance in the near future as well.

P/S ratio

Another important metric is the price-to-sales ratio. This approach compares the price of a particular stock to its total sales, with a lower value generally being considered better. Some people like this metric more than other value-based metrics because it takes into account sales, which are far more difficult to manipulate with accounting tricks than earnings.

Currently, OneMain Holding has a P/S ratio of about 1.29. This is significantly lower than the S&P 500 average, which is currently at 3.35. As we can see in the chart below, this is also well below the highs this stock has seen in recent years.

Comprehensive value outlook

Overall, OneMain Holdings currently has a Value Score of A, putting it in the top 20% of all stocks we cover in this report. This makes OneMain Holdings a solid choice for value investors.

What is the overall situation with the stock?

While OneMain Holdings could be a great choice for value investors, there are many other factors to consider before investing in this name. In particular, it’s worth noting that the company has a Growth Score of B and a Momentum Score of B. This gives OMF a Zacks VGM Score — or its overarching fundamental grade — of A. (Read more about the Zacks Style Scores here >>)

Meanwhile, the company’s recent earnings estimates have been encouraging. For the current year, there have been seven upward revisions and no downward revisions over the past sixty days, while the full-year 2020 estimate has seen five upward revisions and two downward revisions over the same period.

The consensus estimate for the current year has improved by 4.6% over the past two months, while the estimate for the full year 2020 has increased by 1.7%. You can see the consensus estimate trend and the stock’s recent price action in the chart below:

OneMain Holdings, Inc. Price and Consensus

OneMain Holdings, Inc. Price Consensus Chart | OneMain Holdings, Inc. Price

Notably, the stock has a Zacks Rank #2 (Buy) with solid estimate trends and a long-term EPS growth rate of 10%, which is why we expect the company to outperform in the short term.

Bottom line

OneMain Holdings is an inspired choice for value investors as its incredible statistics are hard to beat in this regard. Additionally, the company boasts a robust Zacks Rank of #2 Industry Rank (in the top 26%), suggesting that the broader factors are favorable for the company.

Value investors may therefore want to take a closer look at this stock as it appears to be an attractive choice.

The hottest tech megatrend ever

Last year, the company generated $24 billion in global revenue. Revenue is expected to explode to $77.6 billion by 2020. Well-known investor Mark Cuban says the company will create “the world’s first trillionaires,” but there should still be plenty of money left for regular investors who make the right trades early on.

Check out Zacks’ 3 best stocks to take advantage of this trend >>

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