OneMain Raises Dividend By 36% After EPS Beat Street Estimates

OneMain Holdings raised its quarterly dividend by 36% to $0.45 per share after the financial services company’s 3Q profit exceeded analysts’ estimates. The dividend will be paid on Nov. 17 to shareholders on record as of Nov. 9. OneMain shares are up 1.5% in the pre-market session on Tuesday.

OneMain’s (OMF) 3Q EPS increased 2.2% year-on-year to $1.86 and came ahead of the Street consensus of $1.22. However, 3Q revenues fell 4.3% year-on-year to $935 million, missing analysts’ expectations by $3.42 million.

OneMain said that its Consumer and Insurance (C&I) segment’s adjusted earnings rose to $2.19 per share in 3Q, up from the $1.77 per share in the prior-year quarter. Moreover, the C&I’s provision for finance receivable losses of $232 million in 3Q declined from the year-ago quarter of $277 million, primarily due to the impact of lower delinquencies in the portfolio.

OneMain’s CEO Doug Shulman said that “Our third quarter financial results reflected continued strength across the core drivers of our business, as well as our focused efforts to support customers during this period of uncertainty.” He added that “Advanced data and analytics are driving our sophisticated underwriting and continued innovation, enabling OneMain to continue to enhance and strategically evolve our business while driving strong returns for all stakeholders.” (See OMF stock analysis on TipRanks).

Following the results, Northland Securities analyst Michael Grondahl maintained a Buy rating and a price target of $40 (6.6% upside potential) on the stock. The 5-star analyst said the strong quarter was driven by “better credit quality, slightly higher yields, better than expected asset growth and strong cost controls.” He expects “underlying earnings power and strong likelihood of another special dividend in 1Q2021.” 

Currently, the Street has a bullish outlook on the stock. The Strong Buy analyst consensus is based on 10 Buys and 1 Hold. The average price target of $39.40 implies upside potential of about 5% to current levels. Shares have dropped by about 11% year-to-date.

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