The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. But as Peter Lynch said in One Up On Wall Street , ‘Long shots almost never pay off.’ Loss making companies can act like a sponge for capital – so investors should be cautious that they’re not throwing good money after bad.
In contrast to all that, many investors prefer to focus on companies like OneMain Holdings (NYSE:OMF), which has not only revenues, but also profits. While profit isn’t the sole metric that should be considered when investing, it’s worth recognising businesses that can consistently produce it. How Fast Is OneMain Holdings Growing?
Generally, companies experiencing growth in earnings per share (EPS) should see similar trends in share price. That means EPS growth is considered a real positive by most successful long-term investors. OneMain Holdings’ shareholders have have plenty to be happy about as their annual EPS growth for the last 3 years was 40%. Growth that fast may well be fleeting, but it should be more than enough to pique the interest of the wary stock pickers. Getting in to the the finer details, it important to know that the EPS growth has been helped by share buybacks, demonstrating that the business is positioned to return capital to its shareholders.
It’s often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company’s growth. It’s noted that OneMain Holdings’ revenue from operations was lower than its revenue in the last twelve months, so that could distort our analysis of its margins. While we note OneMain Holdings achieved similar EBIT margins to last year, revenue grew by a solid 5.9% to US$3.3b. That’s progress.
You can take a look at the company’s revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart. NYSE:OMF Earnings and Revenue History July 25th 2022 Fortunately, we’ve got access to analyst forecasts of OneMain Holdings’ future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting . Are OneMain Holdings Insiders Aligned With All Shareholders?
Insider interest in a company always sparks a bit of intrigue and many investors are on the lookout for companies where insiders are putting their money where their mouth is. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. Of course, we can never be sure what insiders are thinking, we can only judge their actions.
One gleaming positive for OneMain Holdings, in the last year, is that a certain insider has buying shares with ample enthusiasm. In one big hit, Chairman Douglas Shulman paid US$500k, for shares at an average price of US$58.50 per share. It doesn’t get much better than that, in terms of large investments from insiders.
On top of the insider buying, it’s good to see that OneMain Holdings insiders have a valuable investment in the business. To be specific, they have US$19m worth of shares. That’s a lot of money, and no small incentive to work hard. Despite being just 0.4% of the company, the value of that investment is enough to show insiders have plenty riding on the venture. Is OneMain Holdings Worth Keeping An Eye On?
OneMain Holdings’ earnings per share have been soaring, with growth rates sky high. The cherry on top is that insiders own a bunch of shares, and one has been buying more. This quick rundown suggests that the business may be of good quality, and also at an inflection point, so maybe OneMain Holdings deserves timely attention. Don’t forget that there may still be risks. For instance, we’ve identified 3 warning signs for OneMain Holdings (2 make us uncomfortable) you should be aware of.
Keen growth investors love to see insider buying. Thankfully, 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 […]
source Here’s Why OneMain Holdings (NYSE:OMF) Has Caught The Eye Of Investors
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