Opportun Stock Falls 25.8% in a Month: Should You Buy the Dip or Wait?

The stock markets have witnessed significant volatility in the past month. Oportun Financial Corporation OPRT, a California-based lending firm, has not been immune to this broader market slump.

In the past month, OPRT shares have tumbled 25.8%, underperforming the Zacks Finance sector and the S&P 500 index.  Additionally, the stock has underperformed its close peers — Enova International, Inc. ENVA and Regional Management Corp. RM.

One-Month OPRT Price Performance

The sell-off in the markets has been primarily caused by the announcement of sweeping “reciprocal” tariffs by President Donald Trump, raising concerns of a full-scale trade war. Also, economic data reflect a slowdown in the U.S. economy and inflationary pressure. These factors have resulted in ambiguity and recessionary fears in the market.

Given the uncertain and volatile backdrop, let us see whether OPRT stock is worth investing in now.

Factors Supporting Opportun Stock

Solid Loan Growth to Support Revenues: Opportun’s revenue growth has been impressive over the past few years, driven by solid loan growth and higher interest rates. The company’s total revenues and loans receivable at fair value witnessed a 5-year (ended 2024) compound annual growth rate (CAGR) of 10.8% and 8.1%, respectively.

Revenue Trend

Opportun has been driving loan growth through its diverse offerings, including personal loans, secured personal loans and “lending as a service” partnership programs, to expand its client base and presence in several markets.

Such offerings enable OPRT to generate a higher yield on its loan portfolio to boost interest income. Also, the company has been reducing its customer acquisition costs (CAC) through higher organic growth. As of Dec. 31, 2024, CAC was $125 compared with $161 as of Dec. 31, 2023.

Also, the company has been witnessing rising non-interest income through higher subscriptions and servicing fees. OPRT’s non-interest income reflected a CAGR of 6.4% over the five years ended 2024.

Thus, Opportun’s solid loans receivables at fair value, improving fee income and product diversification efforts will continue to bolster its top-line growth. Though the company’s loan growth is likely to be subdued this year amid inflationary pressures and higher-for-longer rates, the same is likely to improve as recessionary fears fade away.

Sales Estimates

Management expects total revenues to be in the range of $225-$230 million in the first quarter of 2025, down from $250.5 million in the prior-year quarter. Also, the metric is expected to be $945-$970 million in 2025 compared with $1 billion in 2024.

Robust Technology Usage: Opportun has been leveraging technology to boost its underwriting standards and offer personalized customer service. The company uses artificial intelligence (AI), particularly machine learning (ML), to use alternative datasets to assess the credit profiles of its clients. This enables it to provide a score to roughly all its clients, including those who have little to no credit history.
 
This enables enhanced underwriting, leading to lower default risks, and ensures consistent revenue growth while mitigating costs. Further, the lending database allows OPRT to scale up its operations efficiently with minimal infrastructure investment.

Additionally, OPRT offers the Set & Save product, which helps its clients manage their money by analyzing their obligations and expense routines. Thus, the assimilation of sophisticated technology to address its customers’ needs offers Opportun a competitive edge over its traditional counterparts, who often rely on traditional datasets to provide credit scores. This enables OPRT to grow its market share rapidly and achieve efficiency alongside solid underwriting.

Solid Balance Sheet: As of Dec. 31, 2024, Opportun's cash and cash equivalents (including restricted cash) totaled $214.6 million. It had a debt (including lease liabilities and other liabilities) of $69.1 million as of the same date.

OPRT has diverse sources to fund its loan growth, including cash flows from operations, securitizations, secured borrowings, corporate financing, and structured and whole loan sales.

Thus, a strong liquidity sheet position and diversified funding profile will continue to support the company’s financials.

Bullish Analyst Sentiments for OPRT Stock

Over the past two months, the Zacks Consensus Estimate for Opportun’s 2025 and 2026 earnings of $1.19 and $1.67 per share has been revised 11.2% and 6.4% upward, respectively.

Estimate Revision Trend

The projected figures imply year-over-year earnings growth of 65.3% and 40.3% for 2025 and 2026, respectively.

Management anticipates 2025 adjusted net income to be in the range of $53-$63 million compared with $29.3 million in 2024. Moreover, 2025 adjusted earnings per share are expected to be in the range of $1.10-$1.30, up from 72 cents in 2024.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Opportun Stock Undervalued

In terms of valuation, Opportun’s price-to-book ratio (P/B) of 0.45X is lower than the industry's 2.25X. Thus, the stock is trading at a discount. This suggests that investors may pay a lower price than the company's expected earnings growth.

P/B Ratio

On the other hand, Enova and Regional Management have P/B ratios of 1.85X and 0.77X, respectively.

To Buy or Not to Buy OPRT Stock?

Opportun is well-positioned for growth, given its solid loan growth, partnership programs and improving fee income. Further, product diversification efforts and the usage of AI and ML are expected to drive growth. Bullish analyst sentiment and discounted valuation are other positives.
 
However, a persistent increase in expenses is a headwind. Operating expenses recorded a five-year CAGR of 2.5% (ended 2024) due to higher sales and marketing, technological, and personnel expenses. Last year, the company introduced a plan to reduce expenses by $30 million on an annualized basis. Despite this, overall expenses are expected to be elevated in the near term as the company intends to enhance its technology and raise headcount as it expands into different markets.

Expense Trend

Further, Opportun is utilizing shareholders’ funds inefficiently. This is demonstrated by the company’s return on equity (ROE) of 5.50%, which compares unfavorably with the industry’s 9.68%.

OPRT’s Return on Equity Trend

On the contrary, Enova and Regional Management have ROEs of 19.94% and 13.09%, respectively.

Nonetheless, technology-driven lending will likely boost OPRT’s operational efficiency in the long run and support sophisticated credit underwriting. Moreover, a solid balance sheet and diversified funding profile suggest financial stability.

Thus, Opportun stock remains a lucrative bet for long-term investors.
 
Currently, OPRT sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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

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