Oportun Financial Corporation (OPRT), a financial services firm offering personal loans as an alternative to payday loans, changed how it calculates Adjusted EBITDA and other preferred profit metrics.

The changes— disclosed in the company’s latest annual report— lifted 2023 Adjusted EBITDA $16.9 million, or 1,013.4%.

Notably, executive bonuses are based, in part, on Adjusted EBITDA targets.

The more flattering methodology comes as loan charge-offs have spiked above Oportun’s historical average.

Between 2014-2022, Oportun’s net charge-off rate was 7%-10.1%.

Though Oportun says it tightened its underwriting standards in 2023-24, net charge-offs increased to 12.2% and 12%, respectively.

With a Market Cap of approximately $285 million, Oportun is priced as if it will grow annual sales to more than $3.2 billion, up from an estimated $962.6 million in 2025. To justify its current share price of $7.96 our Reverse DCF— which quantifies investor expectations embedded in the current share price— indicates Oportun must:

—Grow sales 15% annually between 2027-2033, significantly faster than the company’s estimated 2025 and 2026 sales growth of (3.9%) and 8.9%, respectively and the three-year average of 12.5%
—Immediately increase NOPAT margin to 6%, significantly higher than our 3-year average estimate of (9.36%)
—Increase Invested Capital (IC) Turns to 1.7 from our 3-year average estimate of 1.5

Notably, the current share price also implies Oportun increases Return on Invested Capital (ROIC) to 10.2% from our 3-year average estimate of (2.82%):