NEW YORK (TheStreet) -- Springleaf Holdings (LEAF) - Get Report stock is advancing 15.84% to $51.20 on heavy trading volume on Friday after the company reached a settlement with the Department of Justice and the attorney generals of seven state to complete the acquisition of OneMain Financial Holdings.
The personal banking company agreed to acquire OneMain Financial from a Citigroup (C) subsidiary for $4.25 billion in cash in March.
Springleaf will sell 127 branches in 11 states, or 6% of the company's total branches, to Lendmark Financial Services for an undisclosed amount.
The combined company will have nearly 1,850 branches in 43 states after the sale.
"Reflecting the significant earnings power of the new combined company, we expect to generate core net income of$830 million to$900 million, or$6.20 to $6.70 per share in 2017," Springleaf CEO Jay Levine said in a statement.
The outlook represents a significant growth from 2015 and 2016 earnings estimates, which are $2.11 per share and $5.36 per share, respectively, according to analysts surveyed by Thomson Reuters.
The companies will merge to form OneMain Holdings. Springleaf has applied to change its ticker on the New York Stock Exchange to "OMF," effective November 27.
So far today, 3.84 million shares of Springleaf have exchanged hands, compared with its average daily volume of 431,775 shares.
Separately, TheStreet Ratings team rates SPRINGLEAF HOLDINGS INC as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:
We rate SPRINGLEAF HOLDINGS INC (LEAF) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity and feeble growth in its earnings per share.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Consumer Finance industry. The net income has significantly decreased by 102.6% when compared to the same quarter one year ago, falling from $426.75 million to -$11.00 million.
- The debt-to-equity ratio is very high at 3.20 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Consumer Finance industry and the overall market, SPRINGLEAF HOLDINGS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- SPRINGLEAF HOLDINGS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SPRINGLEAF HOLDINGS INC turned its bottom line around by earning $4.37 versus -$0.18 in the prior year. For the next year, the market is expecting a contraction of 50.8% in earnings ($2.15 versus $4.37).
- LEAF, with its decline in revenue, slightly underperformed the industry average of 4.3%. Since the same quarter one year prior, revenues slightly dropped by 9.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- You can view the full analysis from the report here: LEAF
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.