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Should Value Investors Buy OneMain Holdings (OMF) Stock?

Zacks Equity Research

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is OneMain Holdings (OMF). OMF is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 6.50. This compares to its industry's average Forward P/E of 7.98. OMF's Forward P/E has been as high as 7.08 and as low as 4.17, with a median of 5.76, all within the past year.

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Investors should also note that OMF holds a PEG ratio of 0.65. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. OMF's PEG compares to its industry's average PEG of 0.70. Over the last 12 months, OMF's PEG has been as high as 0.81 and as low as 0.51, with a median of 0.60.

Value investors will likely look at more than just these metrics, but the above data helps show that OneMain Holdings is likely undervalued currently. And when considering the strength of its earnings outlook, OMF sticks out at as one of the market's strongest value stocks.


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Zacks Investment Research