Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 7 stocks made the list for top value stocks in the Consumer Lending industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Consumer Lending Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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7 Undervalued Consumer Lending Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 7 undervalued stocks in the Consumer Lending industry for Monday, June 24, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Consumer Lending industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Aaron's Company Inc’s Value Grade

Value Grade:

The Aaron’s Company, Inc. is a technology-enabled, omnichannel provider of lease-to-own and retail purchase solutions for appliances, electronics, furniture, and other home goods across its brands, including Aaron’s, BrandsMart U.S.A., BrandsMart Leasing, and Woodhaven. The Company offers a direct-to-consumer lease-to-own solution through its approximately 1,240 Company-operated and franchised stores in 47 states and Canada, as well as its own e-commerce platform. BrandsMart U.S.A. is an appliance retailer in the country with about 11 retail stores in Florida and Georgia, as well as its e-commerce platform. BrandsMart Leasing offers lease-to-own solutions to customers of BrandsMart U.S.A. Woodhaven is the Company's furniture manufacturing division. The Company’s business segment consists of Aaron's branded Company-operated and franchise-operated stores; aarons.com e-commerce platform (aarons.com); Woodhaven; and BrandsMart Leasing (collectively Aaron’s Business).

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Aaron's Company Inc has a Value Score of 100, which is considered to be undervalued.

When you look at Aaron's Company Inc’s price-to-sales ratio at 0.14 compared to the industry median at 1.20, this company has a lower price relative to revenue compared to its peers. This could make Aaron's Company Inc’s stock more attractive for value investors.

Now, let’s assess Aaron's Company Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 0.8, when compared to the industry median of 14.4, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Aaron's Company Inc’s shareholder yield is higher than its industry median ratio of 1.73%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Aaron's Company Inc’s price-to-book ratio is lower than its industry median ratio of 1.00. This could make Aaron's Company Inc more attractive to investors looking for a new addition to their portfolio.

Ally Financial Inc’s Value Grade

Value Grade:

Ally Financial Inc. is a financial services company. The Company's segments include Automotive Finance operations, Insurance operations, Mortgage Finance operations, and Corporate Finance operations. The Automotive Finance operations segment is engaged in providing services, such as retail installment sales contracts, loans and operating leases, offering term loans to dealers, financing dealer floorplans and other lines of credit to dealers, and other services. Insurance operations is a complementary automotive-focused business offering both consumer finance protection and insurance products sold primarily through the automotive dealer channel, and commercial insurance products sold directly to dealers. The Mortgage Finance operations segment includes its direct-to-consumer Ally Home mortgage offering and bulk purchases of jumbo and LMI mortgage loans originated by third parties. The Corporate Finance operations segment provides senior secured asset-based and leveraged cash flow loans.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Ally Financial Inc has a Value Score of 75, which is considered to be undervalued.

Ally Financial Inc’s price-earnings ratio is 16.3 compared to the industry median at 9.7. This means that it has a higher price relative to its earnings compared to its peers. This makes Ally Financial Inc less attractive for value investors.

Ally Financial Inc’s price-to-book ratio is lower than its peers. This could make Ally Financial Inc more attractive for value investors when compared to the industry median at 1.00.

You can read more about Ally Financial Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

OneMain Holdings Inc’s Value Grade

Value Grade:

OneMain Holdings, Inc. is a financial service holding company. The Company provides personal loan products; offers credit cards; offers optional credit insurance and other; offers a customer-focused financial wellness program, and acquisitions and dispositions of assets and businesses. It provides origination, underwriting, and servicing of personal loans, primarily to nonprime customers. In addition, the Company offers two credit cards, BrightWay and BrightWay+, through a third-party bank partner. The Company offers optional credit insurance products, such as credit life insurance, which provides for payment to the lender of the finance receivable in the event of the borrower’s death; credit disability insurance, which provides scheduled monthly loan payments to the lender during borrower’s disability due to illness or injury, and credit involuntary unemployment insurance, which provides scheduled monthly loan payments to the lender during borrower’s involuntary unemployment.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

OneMain Holdings Inc has a Value Score of 74, which is considered to be undervalued.

OneMain Holdings Inc’s price-earnings ratio is 9.6 compared to the industry median at 9.7. This means that it has a lower price relative to its earnings compared to its peers. This makes OneMain Holdings Inc more attractive for value investors.

OneMain Holdings Inc’s price-to-book ratio is lower than its peers. This could make OneMain Holdings Inc more attractive for value investors when compared to the industry median at 1.00.

You can read more about OneMain Holdings Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Oportun Financial Corp’s Value Grade

Value Grade:

Oportun Financial Corporation is a fintech company. Its financial products allow it to meet its members where they are and assist them with their overall financial health. Its products include personal loans, unsecured personal loans, secured personal loans, and Set & Save. Personal loans allow its members to address pressing financial needs as well as planned purchases and personal growth opportunities. Its secured personal loans allow its members to access larger loan sizes than they can with an unsecured loan, which is critical if the financial need they are addressing exceeds its unsecured lending limits for that member. Set & Save is its savings product. Its intelligent lending and savings platform is designed to help people, even those who are not well served by mainstream financial institutions, access credit and automate their savings without impacting their ability to meet daily spending needs. It applies artificial intelligence (AI) to automates people’s financial health.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Oportun Financial Corp has a Value Score of 90, which is considered to be undervalued.

Oportun Financial Corp’s price-to-book ratio is higher than its peers. This could make Oportun Financial Corp less attractive for value investors when compared to the industry median at 1.00.

You can read more about Oportun Financial Corp’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

CPI Card Group Inc’s Value Grade

Value Grade:

CPI Card Group Inc. is a payments technology company and provider of comprehensive financial payment card solutions in the United States. The Company’s segments include Debit and Credit, Prepaid Debit and Other. The Debit and Credit segment produces financial payment cards and provides integrated card services, including digital services, for card-issuing financial institutions and fintechs primarily in the United States. Products produced by this segment include EMV and non-EMV Financial Payment Cards, including contact and contactless (dual interface) cards and plastic and encased metal cards, and Second Wave payment cards featuring a core made with ROBP, and other private label credit cards that are not issued on the networks of the Payment Cards Brands. The Prepaid Debit segment primarily provides integrated prepaid card services to Prepaid Debit Card providers in the United States, including tamper-evident security packaging. This segment also produces financial payment cards.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

CPI Card Group Inc has a Value Score of 80, which is considered to be undervalued.

CPI Card Group Inc’s price-earnings ratio is 16.6 compared to the industry median at 9.7. This means that it has a higher price relative to its earnings compared to its peers. This makes CPI Card Group Inc less attractive for value investors.

You can read more about CPI Card Group Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Regional Management Corp’s Value Grade

Value Grade:

Regional Management Corp. is a diversified consumer finance company. The Company provides installment loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies, and other lenders. Its products include small and large installment loans. It provides its customers optional payment and collateral protection insurance. It offers small installment loans with cash proceeds to customers ranging from $500 to $2,500, with terms of up to 48 months. It offers large installment loans with cash proceeds to customers ranging from $2,501 to $25,000, with terms between 18 and 60 months. It offers its customers optional payment and collateral protection insurance relating to its loan products, including credit life insurance, accident and health insurance, involuntary unemployment insurance, and personal property insurance. The Company also offers indirect retail installment loans of up to $7,500. It operates under the name Regional Finance.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Regional Management Corp has a Value Score of 86, which is considered to be undervalued.

Regional Management Corp’s price-earnings ratio is 11.9 compared to the industry median at 9.7. This means that it has a higher price relative to its earnings compared to its peers. This makes Regional Management Corp less attractive for value investors.

Regional Management Corp’s price-to-book ratio is higher than its peers. This could make Regional Management Corp less attractive for value investors when compared to the industry median at 1.00.

You can read more about Regional Management Corp’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

SLM Corp’s Value Grade

Value Grade:

SLM Corporation is a holding company, which operates through various subsidiaries and is a financial brand for higher education. The Company’s primary business is to originate and service loans it makes to students and their families to finance the cost of their education. It also offers a range of deposit products insured by the Federal Deposit Insurance Corporation. Its primary private education loan product is the Smart Option Student Loan, which emphasizes in-school payment features that can produce shorter terms and reduce customers’ total finance charges. Smart Option Student Loan generally runs for six months after the borrower separates from school but can run for up to 36 months for a small subset of graduate loans. It also offers six loan products for specific graduate programs of study. These include the Sallie Mae Law School Loan, the Sallie Mae MBA Loan, the Sallie Mae Graduate School Loan for Health Professions, the Sallie Mae Medical School Loan, and others.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

SLM Corp has a Value Score of 84, which is considered to be undervalued.

SLM Corp’s price-earnings ratio is 6.5 compared to the industry median at 9.7. This means that it has a lower price relative to its earnings compared to its peers. This makes SLM Corp more attractive for value investors.

SLM Corp’s price-to-book ratio is lower than its peers. This could make SLM Corp more attractive for value investors when compared to the industry median at 1.00.

You can read more about SLM Corp’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Consumer Lending Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Consumer Lending stocks as well as other industrys.

Choosing Which of the 7 Best Consumer Lending Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Aaron's Company Inc stock has a Value Grade of A.
• Ally Financial Inc stock has a Value Grade of B.
• OneMain Holdings Inc stock has a Value Grade of B.
• Oportun Financial Corp stock has a Value Grade of A.
• CPI Card Group Inc stock has a Value Grade of B.
• Regional Management Corp stock has a Value Grade of A.
• SLM Corp stock has a Value Grade of A.

Now that you have a bit more background about each of the 7 undervalued stocks in the Consumer Lending industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Consumer Lending Stocks

Want to learn more about Consumer Lending stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 7 Undervalued Consumer Lending Stocks for Monday, June 24
• 5 Undervalued Consumer Lending Stocks for Friday, June 21
• 4 Undervalued Consumer Lending Stocks for Thursday, June 20
• Why Bread Financial Holdings Inc’s (BFH) Stock Is Up 7.81%

AAII Disclaimer

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