Head to Head Comparison: Lufax (NYSE:LU) & LexinFintech (NASDAQ:LX)

LexinFintech (NASDAQ:LX) and Lufax (NYSE:LU) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, earnings, risk, dividends, profitability and analyst recommendations.

Dividends

LexinFintech pays an annual dividend of $0.30 per share and has a dividend yield of 45.2%. Lufax pays an annual dividend of $0.12 per share and has a dividend yield of 1.3%. LexinFintech pays out 35.7% of its earnings in the form of a dividend. Lufax pays out -2.0% 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.

Earnings & Valuation

This table compares LexinFintech and Lufax”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LexinFintech	$1.88 billion	0.06	$239.82 million	$0.84	0.79
Lufax	$21.45 billion	0.04	-$291.79 million	($6.10)	-1.56

LexinFintech has higher earnings, but lower revenue than Lufax. Lufax is trading at a lower price-to-earnings ratio than LexinFintech, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares LexinFintech and Lufax’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
LexinFintech	7.94%	8.59%	4.50%
Lufax	N/A	N/A	N/A

Analyst Recommendations

This is a summary of current ratings for LexinFintech and Lufax, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LexinFintech	1	2	0	0	1.67
Lufax	1	2	1	0	2.00

LexinFintech currently has a consensus target price of $2.35, suggesting a potential upside of 253.92%. Lufax has a consensus target price of $17.00, suggesting a potential upside of 78.22%. Given LexinFintech’s higher possible upside, equities analysts clearly believe LexinFintech is more favorable than Lufax.

Volatility & Risk

LexinFintech has a beta of 0.94, meaning that its share price is 6% less volatile than the S&P 500. Comparatively, Lufax has a beta of 0.8, meaning that its share price is 20% less volatile than the S&P 500.

Insider & Institutional Ownership

69.1% of Lufax shares are owned by institutional investors. 27.8% of LexinFintech shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

LexinFintech beats Lufax on 11 of the 16 factors compared between the two stocks.

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.

About Lufax

Lufax Holding Ltd operates as a financial service empowering institution for small and micro businesses in China. The company offers loan products, including general unsecured loans and secured loans, as well as consumer finance loans. It also provides wealth management products, such as asset management plans, mutual fund products, private investment fund products, and trust products. The company was founded in 2005 and is headquartered in Shanghai, China.