Yirendai (NYSE:YRD) & TrueCar (NASDAQ:TRUE) Financial Analysis

TrueCar (NASDAQ:TRUE) and Yirendai (NYSE:YRD) are both small-cap computer and technology companies, but which is the better investment? We will compare the two companies based on the strength of their profitability, institutional ownership, analyst recommendations, dividends, risk, earnings and valuation.

Profitability

This table compares TrueCar and Yirendai’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
TrueCar	-10.27%	-23.76%	-18.02%
Yirendai	20.19%	12.66%	8.93%

Analyst Ratings

This is a summary of recent recommendations and price targets for TrueCar and Yirendai, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TrueCar	2	5	0	0	1.71
Yirendai	0	1	0	0	2.00

TrueCar presently has a consensus price target of $2.65, suggesting a potential upside of 12.77%. Given TrueCar’s higher possible upside, research analysts plainly believe TrueCar is more favorable than Yirendai.

Volatility & Risk

TrueCar has a beta of 2.22, indicating that its share price is 122% more volatile than the S&P 500. Comparatively, Yirendai has a beta of 0.83, indicating that its share price is 17% less volatile than the S&P 500.

Earnings & Valuation

This table compares TrueCar and Yirendai”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TrueCar	$175.60 million	1.19	-$31.05 million	($0.22)	-10.68
Yirendai	$795.41 million	0.43	$216.77 million	$1.99	2.01

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

Insider & Institutional Ownership

79.4% of TrueCar shares are held by institutional investors. Comparatively, 2.0% of Yirendai shares are held by institutional investors. 3.9% of TrueCar shares are held by insiders. Comparatively, 42.2% of Yirendai shares 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.

Summary

Yirendai beats TrueCar on 9 of the 13 factors compared between the two stocks.

About TrueCar

TrueCar, Inc. operates as an internet-based information, technology, and communication services company in the United States. It operates its platform on the TrueCar website and mobile applications. Its platform enables users to obtain market-based pricing data on new and used cars, and to connect with its network of TrueCar certified dealers. The company also offers forecast and consulting services regarding determination of the residual value of an automobile at given future points in time, which are used to underwrite automotive loans and leases, and by financial institutions to measure exposure and risk across loan, lease, and fleet portfolios. In addition, it provides TrueCar Trade, which gives consumers information on the value of their trade-in vehicles and enables them to obtain a guaranteed trade-in price before setting foot in the dealership; and DealerScience that provides dealers with advanced digital retailing software tools. The company was formerly known as Zag.com Inc. The company was incorporated in 2005 and is headquartered in Santa Monica, California.

About Yirendai

Yiren Digital Ltd. provides financial services through an AI-powered platform in China. Its platform provides a suite of financial and lifestyle services. The company offers financial services, which provides a portfolio of loan products to borrowers; insurance brokerage services; and consumption and lifestyle services, including non-financial products and services to meet various consumer needs. It supports clients at various growth stages, addressing financing needs arising from consumption and production activities, and augmenting the well-being and security of individuals, families, and businesses. The company was formerly known as Yirendai Ltd. and changed its name to Yiren Digital Ltd. in September 2019. Yiren Digital Ltd. was founded in 2012 and is based in Beijing, the People's Republic of China. Yiren Digital Ltd. operates as a subsidiary of CreditEase Holdings (Cayman) Limited.