OneMain (OMF)

Consumer finance company OneMain Holdings (NYSE:OMF) met Wall Street’s revenue expectations in Q3 CY2025, with sales up 7.1% year on year to $1.24 billion. Its non-GAAP profit of $1.90 per share was 18.5% above analysts’ consensus estimates.

Company Overview

Dating back to 1912 and formerly known as Springleaf, OneMain Holdings (NYSE:OMF) provides personal loans, auto financing, and credit cards to nonprime consumers who have limited access to traditional banking services.

Personal loan providers offer unsecured credit for various consumer needs. The sector benefits from digital application processes, increasing consumer comfort with online financial services, and opportunities in underserved credit segments. Headwinds include credit risk management in unsecured lending, regulatory oversight of lending practices, and intense competition affecting margins from both traditional and fintech lenders.

OneMain Holdings competes with other nonprime consumer lenders such as Upstart (NASDAQ:UPST), LendingClub (NYSE:LC), and regional banks that offer personal loans. In the auto financing space, its competitors include Credit Acceptance Corporation (NASDAQ:CACC) and regional auto lenders focused on nonprime borrowers.

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, OneMain grew its revenue at a sluggish 4.1% compounded annual growth rate. This was below our standard for the financials sector and is a poor baseline for our analysis.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. OneMain’s annualized revenue growth of 6.6% over the last two years is above its five-year trend, but we were still disappointed by the results. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, OneMain grew its revenue by 7.1% year on year, and its $1.24 billion of revenue was in line with Wall Street’s estimates.

The yield on loans and financial instruments represents the interest income earned relative to the total amount of credit extended by financial institutions. This metric measures both revenue generation capacity and the risk profile of a firm's lending activities.

OneMain’s yield has decreased by 169.7 over the last five but increased by 20 basis points (100 basis points = 1 percentage point) on a two-year basis. Still, both rates of change were worse than the broader financials industry. The firm’s average yield in the most recent quarter was 22.6%.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For Personal Loan companies, we look at pre-tax profit rather than the operating margin that defines sectors such as consumer, tech, and industrials.

Interest income and expenses play a big role in financial institutions' profitability, so they should be factored into the definition of profit. Taxes, however, should not as they are largely out of a company's control. This is pre-tax profit by definition.

Over the last four years, OneMain’s pre-tax profit margin has risen by 27.9 percentage points, going from 46.9% to 19.1%. It has also declined by 1.1 percentage points on a two-year basis, showing its expenses have consistently increased at a faster rate than revenue. This usually raises questions unless the company is in high-growth mode and reinvesting its profits into attractive ventures.

OneMain’s pre-tax profit margin came in at 21.3% this quarter. This result was 3.3 percentage points better than the same quarter last year.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

OneMain’s weak 3.4% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For OneMain, its two-year annual EPS growth of 5.5% was higher than its five-year trend. Accelerating earnings growth is almost always an encouraging data point.

In Q3, OneMain reported adjusted EPS of $1.90, up from $1.26 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects OneMain’s full-year EPS of $6.23 to grow 20.3%.

Financial firms profit by providing a wide range of services, making them fundamentally balance sheet-driven enterprises with multiple intermediation roles. Market participants emphasize balance sheet quality and sustained book value growth when evaluating these multifaceted institutions.

This is why we consider tangible book value per share (TBVPS) an important metric for the sector. TBVPS represents the real net worth per share across all business segments, providing a clear measure of shareholder equity regardless of the complexity of operations. Other (and more commonly known) per-share metrics like EPS can sometimes be murky due to the complexity of multiple business lines, M&A activity, or accounting rules that vary across different financial services segments.

OneMain’s TBVPS grew at a tepid 5.6% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 7.5% annually over the last two years from $11.74 to $13.57 per share.

Return on equity (ROE) reveals the profit generated per dollar of shareholder equity, which represents a key source of bank funding. Banks maintaining elevated ROE levels tend to accelerate wealth creation for shareholders via earnings retention, buybacks, and distributions.

Over the last five years, OneMain has averaged an ROE of 25.6%, exceptional for a company operating in a sector where the average shakes out around 10% and those putting up 25%+ are greatly admired. This is a bright spot for OneMain.

The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.

If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.

OneMain currently has $22.34 billion of debt and $3.38 billion of shareholder's equity on its balance sheet, and over the past four quarters, has averaged a debt-to-equity ratio of 6.6×. We think this is dangerous - for a financials business, anything above 3.5× raises red flags.

It was good to see OneMain beat analysts’ EPS expectations this quarter. We were also glad its net interest income outperformed Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. The stock traded up 3.5% to $57.66 immediately after reporting.

Updated: December 4, 2025 at 11:39 PM EST

Before making an investment decision, investors should account for OneMain’s business fundamentals and valuation in addition to what happened in the latest quarter.

OneMain’s business quality ultimately falls short of our standards. To begin with, its revenue growth was uninspiring over the last five years. And while its stellar ROE suggests it has been a well-run company historically, the downside is its declining pre-tax profit margin shows the business has become less efficient. On top of that, its falling yields show its credit portfolio is delivering lower returns than before.

OneMain’s P/E ratio based on the next 12 months is 8.6x. While this valuation is optically cheap, the potential downside is big given its shaky fundamentals. We're pretty confident there are superior stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $66.07 on the company (compared to the current share price of $66.26).