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.

Latest Consumer Lending Stock News

Before choosing which top Consumer Lending stock to buy, be sure to conduct proper due diligence: analyze various financial metrics and look at historical data, public statements and news coverage.

There is a neutral forecast for the consumer lending sector. In contrast to organizations that target subprime customers, the outlook is favorable for businesses with a prime and wealthy customer base. In addition, consumers amassed $87.3 billion in new credit card debt in 2021, significantly more than the $48.5 billion 10-year average, according to WalletHub's Credit Card Debt Study. It is expected that loan growth will continue to be high in 2022 as consumers use down their extra savings and government aid continues to be phased out. In 2022,  net revenue is expected to expand due to increasing net interest income. Expanding net interest margins and loan expansion are two factors believes to benefit net interest income. As a result of multi-decade high inflation, the Fed could increase interest rates several more times in 2022–2023. The S&P Consumer Finance sub-industry was down 21.2% year to date as of July 1 compared to a 17.9% decline in the Financials sector as a whole and a 19.7% decline in the S&P 1500 Index. In 2021, the subsector increased by 34.7%, the Financials sector increased by 32.0%, and the S&P 1500 Index increased by 26.7%.

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 Friday, September 08, 2023. 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 (LTO) and retail purchase solutions. The Company operates through two segments: Aaron's Business and BrandsMart. The Aaron's Business segment is comprised 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). The retail store and e-commerce operations of BrandsMart U.S.A. (excluding BrandsMart Leasing) comprise the BrandsMart segment (collectively, BrandsMart). BrandsMart U.S.A. is an appliance and consumer electronics retailer in the southeast United States and an appliance retailer in the country with over 10 stores in Florida and Georgia and an e-commerce presence on brandsmartusa.com. Aaron?s offers a direct-to-consumer lease-to-own solution through its 1,266 Company-operated and franchised stores in over 47 states and Canada, as well as its e-commerce platform.

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 0.86, 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 1.0, when compared to the industry median of 15.5, 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 2.29%. 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 0.89. This could make Aaron's Company Inc more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Aaron's Company Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Aaron's Company Inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 2.85. This could make Aaron's Company Inc more attractive because the lower P/FCF ratio indicates that Aaron's Company Inc is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Curo Group Holdings Corp’s Value Grade

Value Grade:

CURO Group Holdings Corp. is an omni-channel consumer finance company. The Company is a consumer credit lender serving United States and Canadian customers. The Company provides customers a variety of financial services. The Company operates through the Direct Lending segment. Its Direct Lending segment provides the revolving line of credit (LOC), secured and unsecured installment and single-pay loan products, together with credit protection and other insurance products, and other ancillary sales in the United States and Canada. Its installment loans are offered in-store and online. The Company operates several brands, including Cash Money, LendDirect, Heights Finance, Southern Finance, Covington Credit, Quick Credit and First Heritage Credit.

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.

Curo Group Holdings Corp has a Value Score of 94, which is considered to be undervalued.

You can read more about Curo Group Holdings 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.

Loandepot Inc’s Value Grade

Value Grade:

LoanDepot, Inc. provides a customer-centric, technology-empowered residential mortgage platform. It originates conventional and government mortgage loans, servicing conventional and government mortgage loans, and providing ancillary services. It engages in the originating, financing, selling, and servicing of residential mortgage loans, and engages in title, escrow, and settlement services for mortgage loan transactions. It has built mello, the technology platform that functions across all aspects of its business, including lead generation, applications, data integration, processing, closing, and servicing. Its loan product includes conventional agency-conforming loans, conventional prime jumbo loans, Federal Housing Administration & Department of Veterans Affairs loans, and home equity loans. Its ancillary businesses include settlement services, real estate services and insurance services. Its servicing portfolio and in-house capabilities complement its loan origination strategy.

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.

Loandepot Inc has a Value Score of 98, which is considered to be undervalued.

Loandepot Inc’s price-to-book ratio is lower than its peers. This could make Loandepot Inc fairly attractive for value investors when compared to the industry median at 0.89.

You can read more about Loandepot 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.

Nicholas Financial, Inc.’s Value Grade

Value Grade:

Nicholas Financial, Inc. is a holding company, which conducts its business activities through a wholly owned subsidiary, Nicholas Financial, Inc. (Nicholas Financial). Nicholas Financial is a specialized consumer finance company, which is engaged primarily in acquiring and servicing automobile finance installment contracts (Contracts) for purchases of used and new automobiles and light trucks. Additionally, Nicholas Financial sells consumer-finance-related products. Nicholas Data Services, Inc. (NDS), is a second subsidiary of the Company and it serves as the intermediate holding company for Nicholas Financial. The Company is engaged in the business of providing financing programs, primarily to purchasers of used cars and light trucks who meet the Company’s credit standards but who do not meet the credit standards of traditional lenders, such as banks and credit unions. Its automobile finance programs are conducted in 19 states.

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.

Nicholas Financial, Inc. has a Value Score of 92, which is considered to be undervalued.

Nicholas Financial, Inc.’s price-to-book ratio is higher than its peers. This could make Nicholas Financial, Inc. less attractive for value investors when compared to the industry median at 0.89.

You can read more about Nicholas 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.

CPI Card Group Inc’s Value Grade

Value Grade:

CPI Card Group Inc. is a payment technology company and a 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 primarily produces financial payment cards and provides integrated card services for card-issuing financial institutions and fintech?s primarily in the United States. Products produced by this segment primarily 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 87, which is considered to be undervalued.

CPI Card Group Inc’s price-earnings ratio is 5.8 compared to the industry median at 8.9. This means that it has a lower price relative to its earnings compared to its peers. This makes CPI Card Group Inc more 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.

Qifu Technology Inc - ADR’s Value Grade

Value Grade:

Qifu Technology Inc, formerly 360 DigiTech Inc, is a China-based company mainly engaged in credit technology services. The services provided by the Company are divided into credit-driven services and platform services according to the nature of the service and the level of related credit risk. The credit-driven services match potential borrowers with financial institutions, enabling financial institutions to obtain borrowers, conduct credit evaluation, fund matching and post-loan services. The platform services include a full range of loan assistance and post-loan services under the capital-light model, intelligent marketing services, referral services, and risk management software as services (SaaS) for financial institution partners under the Intelligent Credit Engine (ICE) model.

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.

Qifu Technology Inc - ADR has a Value Score of 94, which is considered to be undervalued.

Qifu Technology Inc - ADR’s price-earnings ratio is 4.9 compared to the industry median at 8.9. This means that it has a lower price relative to its earnings compared to its peers. This makes Qifu Technology Inc - ADR more attractive for value investors.

Qifu Technology Inc - ADR’s price-to-book ratio is lower than its peers. This could make Qifu Technology Inc - ADR fairly attractive for value investors when compared to the industry median at 0.89.

You can read more about Qifu Technology Inc - ADR’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.

Sentage Holdings Inc’s Value Grade

Value Grade:

Sentage Holdings Inc is a financial service provider that offers a comprehensive range of financial services across consumer loan repayment and collection management, loan recommendation, and prepaid payment network services in China. The Company's main businesses are divided into three reporting segments. Consumer Loan Repayment and Collection Management Services segment, Pursuant to service agreements entered with individual customers, the Company monitors and manages the repayment and collection process of outstanding loans for a fixed service fee; Loan Recommendation Services segment, the Company engaged in making loan product recommendations to borrower applicants based on their specific needs, and processing paperwork related to borrowers’ applications; and Prepaid Payment Network Services segment, issuing generic and branded prepaid gift and debit cards and providing related services to various merchants, such as supermarkets and department stores.

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.

Sentage Holdings Inc has a Value Score of 73, which is considered to be undervalued.

Sentage Holdings Inc’s price-to-book ratio is higher than its peers. This could make Sentage Holdings Inc less attractive for value investors when compared to the industry median at 0.89.

You can read more about Sentage 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.

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.
• Curo Group Holdings Corp stock has a Value Grade of A.
• Loandepot Inc stock has a Value Grade of A.
• Nicholas Financial, Inc. stock has a Value Grade of A.
• CPI Card Group Inc stock has a Value Grade of A.
• Qifu Technology Inc - ADR stock has a Value Grade of A.
• Sentage Holdings Inc stock has a Value Grade of B.

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 Friday, September 08
• 5 Undervalued Consumer Lending Stocks for Thursday, September 07
• Why Qifu Technology Inc - ADR’s (QFIN) Stock Is Down 6.28%
• 5 Undervalued Consumer Lending Stocks for Wednesday, September 06

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