Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 6 stocks made the list for top value stocks in the Consumer Finance 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 Finance 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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6 Undervalued Consumer Finance Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 6 undervalued stocks in the Consumer Finance industry for Thursday, October 03, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Consumer Finance 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.

Katapult Holdings, Inc.’s Value Grade

Value Grade:

Katapult Holdings, Inc. operates a lease-to-own platform for nonprime consumers in the United States. The company’s technology platform provides nonprime consumers with a lease purchase option to enable them to obtain durable goods from its network of e-commerce retailers. It also offers Katapult Pay, a one-time use virtual card technology to facilitate payment to the merchant at check out. The company was formerly known as Cognical Holdings, Inc. and changed its name to Katapult Holdings, Inc. in February 2020. The company is headquartered in Plano, Texas.

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.

Katapult Holdings, Inc. has a Value Score of 75, which is considered to be undervalued.

When you look at Katapult Holdings, Inc.’s price-to-sales ratio at 0.18 compared to the industry median at 1.13, this company has a lower price relative to revenue compared to its peers. This could make Katapult Holdings, Inc.’s stock more attractive for value investors.

Now, let’s assess Katapult Holdings, Inc.’s EV/EBITDA ratio, also known as enterprise multiple. At 6.3, when compared to the industry median of 6.4, 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. Katapult Holdings, Inc.’s shareholder yield is lower than its industry median ratio of 2.50%. 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.

Joint Stock Company Kaspi.kz’s Value Grade

Value Grade:

Joint Stock Company Kaspi.kz, together with its subsidiaries, provides payments, marketplace, and fintech solutions for consumers and merchants in the Republic of Kazakhstan. It operates through three segments: Payments Platform, Marketplace Platform, and Fintech Platform. The Payments Platform segment facilities transactions between customers and merchants. This segment offers shopping transactions, regular household bills, and peer to peer payments for consumers; accepts payment online and in store, issue and settle invoices, pay suppliers and monitor merchant turnover. It also provides proprietary data facilities informed decision making across multiple areas of business. Its Marketplace Platform segment connects online, and offline merchants and consumers enabling merchants to enhance its sales through an omni channel strategy and enable consumers to buy products and services from various merchants. This segment also operates marketplace through m-commerce, a mobile solution for shopping in person which consumers can use e-commerce to shop anywhere, anytime with free delivery; Kaspi Travel allows consumers to book domestic and international flights and package holidays, domestic rail tickets. It also enhances merchants sales by connecting payments and fintech products, Kapsi advertising, and other delivery services. The Fintech Platform segment provides consumers with BNPL, finance, and savings products and merchants with merchant finance services through super apps and Kapsi.kz Super app. It also involved in the banking; distressed asset management; real estate business; payment processing; online travel; and storage and processing of information services. The company was incorporated in 2008 and is headquartered in Almaty, the Republic of Kazakhstan.

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.

Joint Stock Company Kaspi.kz has a Value Score of 98, which is considered to be undervalued.

Joint Stock Company Kaspi.kz’s price-earnings ratio is 10.5 compared to the industry median at 11.6. This means that it has a lower price relative to its earnings compared to its peers. This makes Joint Stock Company Kaspi.kz more attractive for value investors.

Joint Stock Company Kaspi.kz’s price-to-book ratio is higher than its peers. This could make Joint Stock Company Kaspi.kz less attractive for value investors when compared to the industry median at 0.96.

You can read more about Joint Stock Company Kaspi.kz’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.

Old Market Capital Corporation’s Value Grade

Value Grade:

Nicholas Financial, Inc. operates as a consumer finance company primarily in the United States. The company engages in acquiring and servicing automobile finance installment contracts for the purchase of new and used automobiles and light trucks. It also originates direct consumer loans and sells consumer-finance related products. The company operates branch offices located in Alabama, Florida, Georgia, Idaho, Illinois, Indiana, Kentucky, Michigan, Missouri, Nevada, North Carolina, Nevada, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Utah, and Wisconsin. Nicholas Financial, Inc. was founded in 1985 and is headquartered in Clearwater, Florida.

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.

Old Market Capital Corporation has a Value Score of 81, which is considered to be undervalued.

Old Market Capital Corporation’s price-to-book ratio is higher than its peers. This could make Old Market Capital Corporation less attractive for value investors when compared to the industry median at 0.96.

You can read more about Old Market Capital Corporation’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.

OppFi Inc.’s Value Grade

Value Grade:

OppFi Inc. is a tech-enabled specialty finance platform that broadens the reach of community banks to extend credit access to everyday Americans. It supports consumers, who are turned away by mainstream options, to build financial health, through transparency, responsible lending, financial inclusion, and a better customer experience. The company was founded in 2012 and is headquartered in Chicago, Illinois.

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.

OppFi Inc. has a Value Score of 78, which is considered to be undervalued.

OppFi Inc.’s price-earnings ratio is 16.6 compared to the industry median at 11.6. This means that it has a higher price relative to its earnings compared to its peers. This makes OppFi Inc. less attractive for value investors.

OppFi Inc.’s price-to-book ratio is higher than its peers. This could make OppFi Inc. less attractive for value investors when compared to the industry median at 0.96.

You can read more about OppFi 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 Corporation’s Value Grade

Value Grade:

Oportun Financial Corporation provides financial services. The company offers personal loans and credit cards. It serves customers through online and over the phone, as well as through retail and Lending as a Service partner locations. The company was founded in 2005 and is headquartered in San Carlos, California.

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 Corporation has a Value Score of 90, which is considered to be undervalued.

Oportun Financial Corporation’s price-to-book ratio is higher than its peers. This could make Oportun Financial Corporation less attractive for value investors when compared to the industry median at 0.96.

You can read more about Oportun Financial Corporation’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.

Synchrony Financial’s Value Grade

Value Grade:

Synchrony Financial, together with its subsidiaries, operates as a consumer financial services company in the United States. It provides credit products, such as credit cards, commercial credit products, and consumer installment loans. The company also offers private label credit cards, dual co-brand and general purpose credit cards, short- and long-term installment loans, and consumer banking products; and deposit products, including certificates of deposit, individual retirement accounts, money market accounts, and savings accounts, and sweep and affinity deposits, as well as accepts deposits through third-party securities brokerage firms. In addition, it provides debt cancellation products to its credit card customers through online, mobile, and direct mail; and healthcare payments and financing solutions under the CareCredit and Walgreens brands; payments and financing solutions in the apparel, specialty retail, outdoor, music, and luxury industries, such as American Eagle, Dick's Sporting Goods, Guitar Center, Kawasaki, Pandora, Polaris, Suzuki, and Sweetwater. The company offers its credit products through programs established with a group of national and regional retailers, local merchants, manufacturers, buying groups, industry associations, and healthcare service providers; and deposit products through various channels, such as digital and print. It serves digital, health and wellness, retail, home, auto, telecommunications, jewelry, pets, and other industries. The company was founded in 1932 and is headquartered in Stamford, Connecticut.

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.

Synchrony Financial has a Value Score of 87, which is considered to be undervalued.

Synchrony Financial’s price-earnings ratio is 7.0 compared to the industry median at 11.6. This means that it has a lower price relative to its earnings compared to its peers. This makes Synchrony Financial more attractive for value investors.

Synchrony Financial’s price-to-book ratio is lower than its peers. This could make Synchrony Financial more attractive for value investors when compared to the industry median at 0.96.

You can read more about Synchrony Financial’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 Finance 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 Finance stocks as well as other industrys.

Choosing Which of the 6 Best Consumer Finance 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.

• Katapult Holdings, Inc. stock has a Value Grade of B.
• Joint Stock Company Kaspi.kz stock has a Value Grade of A.
• Old Market Capital Corporation stock has a Value Grade of A.
• OppFi Inc. stock has a Value Grade of B.
• Oportun Financial Corporation stock has a Value Grade of A.
• Synchrony Financial stock has a Value Grade of A.

Now that you have a bit more background about each of the 6 undervalued stocks in the Consumer Finance 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 Finance Stocks

Want to learn more about Consumer Finance 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.

• 6 Undervalued Consumer Finance Stocks for Thursday, October 03
• 5 Undervalued Consumer Lending Stocks for Tuesday, October 01
• 6 Undervalued Consumer Lending Stocks for Monday, September 30
• Is Yiren Digital Ltd - ADR (YRD) a Good Dividend Stock?

AAII Disclaimer

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