Decent Value Stocks. Analyze the stocks with a good fundamental valuation, while still showing decent profitability, health and growth.


QIFU TECHNOLOGY INC

Nasdaq / Financials / Consumer Finance

Fundamental Rating

8

Overall QFIN gets a fundamental rating of 8 out of 10. We evaluated QFIN against 52 industry peers in the Consumer Finance industry. QFIN gets an excellent profitability rating and is at the same time showing great financial health properties. An interesting combination arises when we look at growth and value: QFIN is growing strongly while it also seems undervalued. These ratings would make QFIN suitable for value and growth and quality investing!



8

1. Profitability

1.1 Basic Checks

QFIN had positive earnings in the past year.
QFIN had a positive operating cash flow in the past year.
In the past 5 years QFIN has always been profitable.
Each year in the past 5 years QFIN had a positive operating cash flow.

1.2 Ratios

QFIN has a better Return On Assets (11.62%) than 92.31% of its industry peers.
With an excellent Return On Equity value of 23.90%, QFIN belongs to the best of the industry, outperforming 86.54% of the companies in the same industry.
The Return On Invested Capital of QFIN (18.00%) is better than 94.23% of its industry peers.
QFIN had an Average Return On Invested Capital over the past 3 years of 19.66%. This is significantly above the industry average of 7.43%.
Industry RankSector Rank
ROA 11.62%
ROE 23.9%
ROIC 18%
ROA(3y)12.19%
ROA(5y)12.64%
ROE(3y)26.3%
ROE(5y)30.1%
ROIC(3y)19.66%
ROIC(5y)21.79%

1.3 Margins

QFIN has a better Profit Margin (31.78%) than 92.31% of its industry peers.
QFIN's Profit Margin has been stable in the last couple of years.
QFIN has a Operating Margin of 40.27%. This is amongst the best in the industry. QFIN outperforms 96.15% of its industry peers.
In the last couple of years the Operating Margin of QFIN has declined.
QFIN's Gross Margin of 83.13% is amongst the best of the industry. QFIN outperforms 80.77% of its industry peers.
QFIN's Gross Margin has been stable in the last couple of years.
Industry RankSector Rank
OM 40.27%
PM (TTM) 31.78%
GM 83.13%
OM growth 3Y2.19%
OM growth 5Y-4.22%
PM growth 3Y0.67%
PM growth 5YN/A
GM growth 3Y-1.74%
GM growth 5Y0.02%

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7

2. Health

2.1 Basic Checks

QFIN has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
Compared to 1 year ago, QFIN has less shares outstanding
QFIN has more shares outstanding than it did 5 years ago.
QFIN has a worse debt/assets ratio than last year.

2.2 Solvency

The Debt to FCF ratio of QFIN is 0.12, which is an excellent value as it means it would take QFIN, only 0.12 years of fcf income to pay off all of its debts.
QFIN has a Debt to FCF ratio of 0.12. This is amongst the best in the industry. QFIN outperforms 94.23% of its industry peers.
A Debt/Equity ratio of 0.05 indicates that QFIN is not too dependend on debt financing.
QFIN has a better Debt to Equity ratio (0.05) than 88.46% of its industry peers.
Industry RankSector Rank
Debt/Equity 0.05
Debt/FCF 0.12
Altman-Z N/A
ROIC/WACC2.41
WACC7.48%

2.3 Liquidity

QFIN has a Current Ratio of 2.56. This indicates that QFIN is financially healthy and has no problem in meeting its short term obligations.
Looking at the Current ratio, with a value of 2.56, QFIN is in the better half of the industry, outperforming 75.00% of the companies in the same industry.
A Quick Ratio of 2.56 indicates that QFIN has no problem at all paying its short term obligations.
The Quick ratio of QFIN (2.56) is better than 76.92% of its industry peers.
Industry RankSector Rank
Current Ratio 2.56
Quick Ratio 2.56

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8

3. Growth

3.1 Past

The Earnings Per Share has grown by an impressive 40.63% over the past year.
The Earnings Per Share has been growing slightly by 3.42% on average over the past years.
Looking at the last year, QFIN shows a quite strong growth in Revenue. The Revenue has grown by 9.41% in the last year.
Measured over the past years, QFIN shows a very strong growth in Revenue. The Revenue has been growing by 29.65% on average per year.
EPS 1Y (TTM)40.63%
EPS 3Y3.42%
EPS 5YN/A
EPS Q2Q%71.53%
Revenue 1Y (TTM)9.41%
Revenue growth 3Y6.29%
Revenue growth 5Y29.65%
Sales Q2Q%2.08%

3.2 Future

Based on estimates for the next years, QFIN will show a very strong growth in Earnings Per Share. The EPS will grow by 27.08% on average per year.
The Revenue is expected to grow by 8.18% on average over the next years. This is quite good.
EPS Next Y55.03%
EPS Next 2Y32.72%
EPS Next 3Y27.08%
EPS Next 5YN/A
Revenue Next Year5.39%
Revenue Next 2Y4.71%
Revenue Next 3Y5.79%
Revenue Next 5Y8.18%

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.

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9

4. Valuation

4.1 Price/Earnings Ratio

With a Price/Earnings ratio of 7.27, the valuation of QFIN can be described as very cheap.
Based on the Price/Earnings ratio, QFIN is valued cheaply inside the industry as 80.77% of the companies are valued more expensively.
When comparing the Price/Earnings ratio of QFIN to the average of the S&P500 Index (29.70), we can say QFIN is valued rather cheaply.
The Price/Forward Earnings ratio is 5.49, which indicates a rather cheap valuation of QFIN.
Based on the Price/Forward Earnings ratio, QFIN is valued cheaper than 82.69% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of QFIN to the average of the S&P500 Index (24.16), we can say QFIN is valued rather cheaply.
Industry RankSector Rank
PE 7.27
Fwd PE 5.49

4.2 Price Multiples

Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of QFIN indicates a rather cheap valuation: QFIN is cheaper than 84.62% of the companies listed in the same industry.
Based on the Price/Free Cash Flow ratio, QFIN is valued a bit cheaper than 63.46% of the companies in the same industry.
Industry RankSector Rank
P/FCF 4.73
EV/EBITDA 4.34

4.3 Compensation for Growth

The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
QFIN has an outstanding profitability rating, which may justify a higher PE ratio.
QFIN's earnings are expected to grow with 27.08% in the coming years. This may justify a more expensive valuation.
PEG (NY)0.13
PEG (5Y)N/A
EPS Next 2Y32.72%
EPS Next 3Y27.08%

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3

5. Dividend

5.1 Amount

With a Yearly Dividend Yield of 3.06%, QFIN has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 3.87, QFIN pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.16, QFIN pays a bit more dividend than the S&P500 average.
Industry RankSector Rank
Dividend Yield 3.06%

5.2 History

QFIN has been paying a dividend for less than 5 years, so it still needs to build a track record.
Dividend Growth(5Y)N/A
Div Incr Years1
Div Non Decr Years1

5.3 Sustainability

DPN/A
EPS Next 2Y32.72%
EPS Next 3Y27.08%

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