Comparing LexinFintech (NASDAQ:LX) and Regional Management (NYSE:RM)

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

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LexinFintech	$1.95 billion	0.29	$150.76 million	$1.42	2.32
Regional Management	$588.50 million	0.67	$41.23 million	$4.13	9.80

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

Institutional and Insider Ownership

98.9% of Regional Management shares are owned by institutional investors. 27.8% of LexinFintech shares are owned by insiders. Comparatively, 10.5% of Regional Management shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Dividends

LexinFintech pays an annual dividend of $0.31 per share and has a dividend yield of 9.4%. Regional Management pays an annual dividend of $1.20 per share and has a dividend yield of 3.0%. LexinFintech pays out 21.8% of its earnings in the form of a dividend. Regional Management pays out 29.1% 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. LexinFintech is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

LexinFintech has a beta of 0.68, meaning that its stock price is 32% less volatile than the S&P 500. Comparatively, Regional Management has a beta of 1.09, meaning that its stock price is 9% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations for LexinFintech and Regional Management, as provided by MarketBeat.com.

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

LexinFintech presently has a consensus price target of $3.50, suggesting a potential upside of 6.06%. Regional Management has a consensus price target of $30.00, suggesting a potential downside of 25.89%. Given LexinFintech’s stronger consensus rating and higher possible upside, analysts clearly believe LexinFintech is more favorable than Regional Management.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
LexinFintech	13.28%	16.11%	8.09%
Regional Management	6.57%	11.43%	2.12%

Summary

LexinFintech beats Regional Management on 10 of the 15 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 Regional Management

Regional Management Corp., a diversified consumer finance company, provides various installment loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies, and other lenders in the United States. It offers small and large installment loans; and retail loans to finance the purchase of furniture, appliances, and other retail products. The company also provides insurance products, including credit life, credit accident and health, credit property, vehicle single interest, and credit involuntary unemployment insurance; collateral protection insurance; and property insurance, as well as reinsurance products. In addition, its loans are sourced through branches, centrally-managed direct mail campaigns, and digital partners, as well as its consumer website. The company was incorporated in 1987 and is headquartered in Greer, South Carolina.