OppFi Inc. OPFI will report first-quarter 2025 results on May 7, before market open.

The Zacks Consensus Estimate for revenues in the to-be-reported quarter is pegged at $137.7 million, suggesting 8.1% growth from the year-ago quarter’s actual. The consensus mark for earnings per share is pegged at 26 cents per share, indicating a more than 100% surge from the year-ago reported figure. Two estimates for the first quarter of 2025 have moved north in the past 60 days versus no southward revision.Zacks Investment Research

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The company has an impressive earnings surprise history. It beat the Zacks Consensus Estimate in the trailing four quarters, delivering an average earnings surprise of 73%.

OppFi Inc. Price, Consensus and EPS Surprise

OppFi Inc. price-consensus-eps-surprise-chart | OppFi Inc. Quote

OPFI’s Chances of Q1 Earnings Beat Low

Our proven model does not conclusively predict an earnings beat for OppFi this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here. You can uncover the best stocks before they are reported with our Earnings ESP Filter.

OPFI has an Earnings ESP of 0.00% and sports a Zacks Rank of 1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Growing Underbanked Customers to Have Been OPFI’s Drivers in Q4

OppFi’s strategy to capture the market share is based on its ability to offer affordable credit to underbanked customers. This market is expected to expand, seeing a 13% CAGR, and hit the $7-trillion mark by 2032. An expansive market is anticipated to have benefited OPFI’s top line as the customer base widens.

The company grabs the opportunity to provide credit to subprime and non-prime credit holders that are often ignored by traditional financial institutions due to high risks and strict capital requirements.

OPFI’s Stock Looks Cheap

OppFi shares have skyrocketed 245.3% in a year. It has outperformed the 21.7% rally of its industry and the 10.7% rise of the Zacks S&P 500 composite. It has also outperformed its industry peers, Corpay, Inc. CPAY and EVERTEC, Inc. EVTC. CPAY has gained 7.9%, while EVTC has fallen 4.9% over the same period.

One-Year Price PerformanceZacks Investment Research

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The OPFI stock is looking cheap and is currently trading at a trailing 12-month price-to-earnings ratio of 8.70, lower than the industry's 22.84. The stock in question is trading cheaper than Corpay and Evertec as well. CPAY and EVTC are trading at a trailing 12-month price-to-earnings ratio of 14.53 and 9.86, respectively.

Story Continues

OppFi’s Investment Considerations

In the fourth quarter of 2024, total net originations grew 11% year over year on the back of bank partners’ expansion into additional states, rising demand via marketing partners and improved lead evaluation capabilities. Also, total retained net originations increased 6% year over year because of originations growth, surpassing the rise in the percentage of loans that bank partners retain.

The proportion of net charge-off to the top line reduced year over year from 46% to 42% in the fourth quarter of 2024. This decline demonstrates a tangible reduction in financial losses and an enhancement in asset quality resulting in better risk management. A lower charge-off rate is a green flag for investors. This is favorable with OppFi’s launch of Model 6, which is superior at identifying risks of long-term charge-offs and targeting quality borrowers at the top of the funnel.

OPFI’s ML models assisted it in improving the credit evaluation process and increasing the average yield to 130% from the year-ago quarter’s 127%. The fall shows a reduction in delinquent loans in the portfolio.

In the fourth quarter of 2024, automated loan approval technology in OppLoans approved 79.5% of loans in second without any human intervention, increasing 630 basis points (bps) from the year-ago quarter. It demonstrates a significant advantage over traditional financial institutions and contributes to disciplined cost management, reducing expenses before interest expenses by 60 bps year over year.

Final Thoughts: Buy OPFI Now

OppFi is set to gain from bank partnerships and enhanced lead evaluation capabilities. Improved risk management facilitated by the company’s ML model reduces losses. OPFI’s automated loan approval technology sets it apart from traditional financial institutions and assists in expense management.

OPFI remains fundamentally strong and possesses a discounted valuation. We expect the stock price to continue rallying. Hence, we recommend investors add OppFi’s stock now.

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This article originally published on Zacks Investment Research (zacks.com).

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