Should OppFi Shares Be in Your Portfolio Pre-Q2 Earnings?

OppFi Inc. OPFI will report second-quarter 2025 results on Aug. 6, before market open.

The Zacks Consensus Estimate for revenues in the to-be-reported quarter is pegged at $141.6 million, representing a 12.1% increase from the year-ago quarter. The consensus mark for earnings per share is set at 30 cents per share, indicating a 3.5% rise from the year-ago reported figure. There has been no change in analyst estimates or revisions lately.

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 59.5%.

OPFI’s Chances of Q2 Earnings Beat Low

Our proven model does not conclusively predict an earnings beat for OppFithis 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 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Customer-Centric Approach: OPFI’s Key Driver in Q2

Oppfi’s customer-first strategy is likely the main driver of the top line. With AI and machine learning (ML) models supporting this customer-centric approach, we expect OPFI to continue increasing auto-approval rates, demonstrating efficient fund access.

In the first quarter of 2025, the company reported that OppLoans had a 4.7/5.0-star rating on Trustpilot with reviews exceeding 4,900. Its Net Promoter Score was 78, bolstering its customer-first strategy. These numbers, which portray customer loyalty and reputation, compel us to anticipate continued strength in serving the underserved population.

OPFI Stock Looks Cheap

OppFi shares have skyrocketed 203.1% in a year. It has outperformed the 22.4% rally of its industry and the 19.5% rise of the Zacks S&P 500 composite. It has also outperformed its industry peers, WEX WEX and Corpay CPAY. WEX has declined 2.2%, while Corpay has gained 17.5% for the same period.

1-Year Price Performance

The OPFI stock appears to be undervalued and is currently trading at a trailing 12-month price-to-earnings ratio of 7.99, which is lower than the industry average of 21.65. The stock in question is trading cheaper than WEX and Corpay as well. WEX and CPAY are trading at a trailing 12-month price-to-earnings ratio of 14.01 and 10.59, respectively.

P/E - F12M

OppFi’s Investment Considerations

OPFI’s business focuses on the underbanked population, which involves high credit risk. However, the company has effectively implemented its risk management strategies to ensure minimal losses. With the net charge-off rate as a percentage of total revenues decreasing by 1300 basis points year over year in the first quarter of 2025, we are confident in the company’s risk mitigation strategies that utilize AI and ML-based credit screening models.

With the growing need for credit within the underbanked population, OPFI stands on the cusp of experiencing exponential growth. When we take its credit risk enhancement techniques into consideration, our expectation for loss reduction and enhanced operational efficiency increases. Also, management’s optimistic full-year guidance shows sustained financial success.

However, a high probability of default lingers as the company increasingly serves the underserved. Despite the OPFI’s effective credit risk management strategies, investors may be skeptical about investing in the stock.

Final Verdict

OppFi has carved out a niche within the fintech space by catering to the underserved. The company is fundamentally strong and possesses a discounted valuation, which is substantially appealing to investors. However, a hasty approach may lead to losses. OPFI’s ability to beat earnings looks bleak, and the fact that its primary market is the underserved population raises questions about its ability to mitigate credit risk in the long run.

Hence, we recommend existing investors hold on to the stock for now. New buyers are advised to make a move post the earnings release after gauging the stock’s performance.

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

Zacks Investment Research