LexinFintech (LX) versus Its Competitors Critical Review

LexinFintech (NASDAQ:LX) is one of 120 public companies in the “Consumer Finance” industry, but how does it contrast to its peers? We will compare LexinFintech to related businesses based on the strength of its earnings, dividends, risk, analyst recommendations, valuation, profitability and institutional ownership.

Dividends

LexinFintech pays an annual dividend of $0.30 per share and has a dividend yield of 45.4%. LexinFintech pays out 35.7% of its earnings in the form of a dividend. As a group, “Consumer Finance” companies pay a dividend yield of 6.1% and pay out 34.2% of their earnings in the form of a dividend.

Analyst Ratings

This is a breakdown of current ratings and target prices for LexinFintech and its peers, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LexinFintech	1	2	0	0	1.67
LexinFintech Competitors	891	3351	5292	274	2.50

LexinFintech currently has a consensus price target of $2.35, suggesting a potential upside of 255.52%. As a group, “Consumer Finance” companies have a potential upside of 21.12%. Given LexinFintech’s higher probable upside, research analysts plainly believe LexinFintech is more favorable than its peers.

Earnings & Valuation

This table compares LexinFintech and its peers revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
LexinFintech	$1.88 billion	$239.82 million	0.79
LexinFintech Competitors	$3.61 billion	$385.17 million	5.79

LexinFintech’s peers have higher revenue and earnings than LexinFintech. LexinFintech is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Institutional & Insider Ownership

45.8% of shares of all “Consumer Finance” companies are held by institutional investors. 27.8% of LexinFintech shares are held by insiders. Comparatively, 22.0% of shares of all “Consumer Finance” companies are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares LexinFintech and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
LexinFintech	7.94%	8.59%	4.50%
LexinFintech Competitors	9.92%	-15.65%	2.14%

Volatility and Risk

LexinFintech has a beta of 0.94, suggesting that its share price is 6% less volatile than the S&P 500. Comparatively, LexinFintech’s peers have a beta of 1.26, suggesting that their average share price is 26% more volatile than the S&P 500.

Summary

LexinFintech peers beat LexinFintech on 10 of the 15 factors compared.

About LexinFintech

LexinFintech Holdings Ltd., through its subsidiaries, provides online consumer finance services in the People's Republic of China. The company operates Fenqile.com, an online consumption and consumer finance platform that offers installment purchase and personal installment loans, as well as online direct sales with installment payment terms; and Le Hua Card, a scenario-based lending. It also provides technology-driven platform services for financial institution customers and partners to increase revenues, manage financial risks, enhance operating efficiency and service quality, enhance collections, and reduce overall costs; Maiya application, a location-based services shopping experience with buy-now and pay-later options; and Juzi Licai, an online investment platform. In addition, the company offers technical support and consulting, software development, financing guarantee, and financial technology services. The company was formerly known as Staging Finance Holding Ltd. and changed its name to LexinFintech Holdings Ltd. in March 2017. LexinFintech Holdings Ltd. was founded in 2013 and is headquartered in Shenzhen, the People's Republic of China.