OMF - OneMain Holdings: Solid Q1 With Credit Losses Peaking (Rating Upgrade)

2024-05-01 16:14:24 ET

Summary

• OneMain Holdings' shares jumped 3% following solid Q1 results, adding to a year of gains and reaching a 52-week high.
• The company's financials showed solid net interest trends and a modest deleveraging, and a slowing growth in receivables due to tightened credit standards.
• Credit costs have been rising, but there are encouraging signs we are at a peak with delinquencies falling, and the company's tighter lending standards should start to buoy results.

Shares of OneMain Holdings ( OMF ) jumped 3% on Tuesday in response to solid Q1 results. This added to a solid year of gains, with shares up 30% and sitting at a 52-week-high. Back in September , I rated shares a “sell,” arguing that shares were not factoring in the sufficient risk of recession. Of course, since then, the economy has continued to perform well, and a recession appears quite unlikely, which has rendered this concern moot....

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