Analyzing Qfin (NASDAQ:QFIN) and Ally Financial (NYSE:ALLY)

Qfin (NASDAQ:QFIN) and Ally Financial (NYSE:ALLY) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, analyst recommendations, earnings, institutional ownership and risk.

Dividends

Qfin pays an annual dividend of $1.54 per share and has a dividend yield of 12.8%. Ally Financial pays an annual dividend of $1.20 per share and has a dividend yield of 2.8%. Qfin pays out 28.2% of its earnings in the form of a dividend. Ally Financial pays out 28.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Qfin is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares Qfin and Ally Financial”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Qfin	$14.99 billion	0.10	$856.52 million	$5.46	2.20
Ally Financial	$9.63 billion	1.38	$852.00 million	$4.24	10.27

Qfin has higher revenue and earnings than Ally Financial. Qfin is trading at a lower price-to-earnings ratio than Ally Financial, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Qfin has a beta of 0.63, suggesting that its stock price is 37% less volatile than the S&P 500. Comparatively, Ally Financial has a beta of 1.1, suggesting that its stock price is 10% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and price targets for Qfin and Ally Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Qfin	1	4	1	0	2.00
Ally Financial	0	2	14	0	2.88

Qfin presently has a consensus target price of $16.31, indicating a potential upside of 35.61%. Ally Financial has a consensus target price of $53.64, indicating a potential upside of 23.13%. Given Qfin’s higher probable upside, analysts plainly believe Qfin is more favorable than Ally Financial.

Profitability

This table compares Qfin and Ally Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Qfin	27.48%	20.85%	8.71%
Ally Financial	16.75%	11.75%	0.79%

Institutional and Insider Ownership

74.8% of Qfin shares are held by institutional investors. Comparatively, 88.8% of Ally Financial shares are held by institutional investors. 17.1% of Qfin shares are held by insiders. Comparatively, 0.5% of Ally Financial shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

Qfin beats Ally Financial on 10 of the 16 factors compared between the two stocks.

About Qfin

Qifu Technology, Inc., through its subsidiaries, operates credit-tech platform under the 360 Jietiao brand in the People's Republic of China. It provides credit-driven services that matches borrowers with financial institutions to conduct customer acquisition, initial and credit screening, advanced risk assessment, credit assessment, fund matching, and other post-facilitation services; and platform services, including loan facilitation and post-facilitation services to financial institution partners under intelligence credit engine, referral services, and risk management software-as-a-service. The company also offers e-commerce loans, enterprise loans, and invoice loans to SME owners. It serves financial institutions, consumers, and small- and micro-enterprises. The company was formerly known as 360 DigiTech, Inc. and changed its name to Qifu Technology, Inc. in March 2023. The company was founded in 2016 and is headquartered in Shanghai, the People's Republic of China.

About Ally Financial

Ally Financial Inc., a digital financial-services company, provides various digital financial products and services in the United States, Canada, and Bermuda. The company operates through Automotive Finance Operations, Insurance Operations, Mortgage Finance Operations, and Corporate Finance Operations segments. The Automotive Finance Operations segment offers automotive financing services, including providing retail installment sales contracts, loans and operating leases, term loans to dealers, financing dealer floorplans and other lines of credit to dealers, warehouse lines to automotive retailers, and fleet financing. It also provides financing services to companies and municipalities for the purchase or lease of vehicles, and vehicle-remarketing services. The Insurance Operations segment offers consumer finance protection and insurance products through the automotive dealer channel, and commercial insurance products directly to dealers. This segment provides vehicle service and maintenance contract, and guaranteed asset protection products; and underwrites commercial insurance coverages, which primarily insure dealers’ vehicle inventory. The Mortgage Finance Operations segment manages consumer mortgage loan portfolio that includes bulk purchases of jumbo and low-to-moderate income mortgage loans originated by third parties, as well as direct-to-consumer mortgage offerings. The Corporate Finance Operations segment provides senior secured leveraged cash flow and asset-based loans to middle market companies; leveraged loans; and commercial real estate product to serve companies in the nursing facilities, senior housing, and medical office buildings. It also offers commercial banking products and services. In addition, it provides securities brokerage and investment advisory services. The company was formerly known as GMAC Inc. and changed its name to Ally Financial Inc. in May 2010. Ally Financial Inc. was founded in 1919 and is based in Detroit, Michigan.