Contrasting LexinFintech (NASDAQ:LX) & Vroom (NASDAQ:VRM)

LexinFintech (NASDAQ:LX) and Vroom (NASDAQ:VRM) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, earnings, institutional ownership, profitability, dividends, valuation and risk.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for LexinFintech and Vroom, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LexinFintech	1	2	0	0	1.67
Vroom	1	0	0	0	1.00

LexinFintech currently has a consensus target price of $2.35, suggesting a potential upside of 269.50%. Given LexinFintech’s stronger consensus rating and higher possible upside, research analysts clearly believe LexinFintech is more favorable than Vroom.

Profitability

This table compares LexinFintech and Vroom’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%
Vroom	-32.38%	-47.65%	-5.59%

Earnings & Valuation

This table compares LexinFintech and Vroom”s gross revenue, earnings per share (EPS) 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	0.76
Vroom	$178.83 million	0.24	-$7.96 million	($11.12)	-0.73

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

Risk and Volatility

LexinFintech has a beta of 0.86, indicating that its stock price is 14% less volatile than the S&P 500. Comparatively, Vroom has a beta of 1.27, indicating that its stock price is 27% more volatile than the S&P 500.

Insider & Institutional Ownership

25.8% of Vroom shares are owned by institutional investors. 27.8% of LexinFintech shares are owned by company insiders. Comparatively, 2.9% of Vroom shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

LexinFintech beats Vroom on 10 of the 13 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 Vroom

Vroom, Inc. operates as an automotive finance company. The company offers vehicle financing to its customers through third party dealers under the UACC brand. It also provides artificial intelligence powered analytics and digital services to dealers, automotive financial services companies, and others in the automotive industry for automotive retail. The company was formerly known as Auto America, Inc. and changed its name to Vroom, Inc. in July 2015. Vroom, Inc. was incorporated in 2012 and is based in Houston, Texas.