Credit Acceptance (NASDAQ:CACC) and LexinFintech (NASDAQ:LX) Head-To-Head Comparison

Credit Acceptance (NASDAQ:CACC) and LexinFintech (NASDAQ:LX) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their profitability, risk, dividends, institutional ownership, analyst recommendations, earnings and valuation.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Credit Acceptance and LexinFintech, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Credit Acceptance	1	2	0	0	1.67
LexinFintech	0	1	2	0	2.67

Credit Acceptance currently has a consensus target price of $440.00, indicating a potential downside of 14.25%. LexinFintech has a consensus target price of $13.60, indicating a potential upside of 164.08%. Given LexinFintech’s stronger consensus rating and higher possible upside, analysts clearly believe LexinFintech is more favorable than Credit Acceptance.

Earnings and Valuation

This table compares Credit Acceptance and LexinFintech”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Credit Acceptance	$2.24 billion	2.58	$247.90 million	$34.69	14.79
LexinFintech	$1.95 billion	0.45	$150.76 million	$1.27	4.06

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Credit Acceptance	18.69%	27.06%	5.08%
LexinFintech	11.50%	14.67%	7.17%

Volatility & Risk

Credit Acceptance has a beta of 1.19, indicating that its share price is 19% more volatile than the S&P 500. Comparatively, LexinFintech has a beta of 0.45, indicating that its share price is 55% less volatile than the S&P 500.

Insider and Institutional Ownership

81.7% of Credit Acceptance shares are owned by institutional investors. 6.6% of Credit Acceptance shares are owned by insiders. Comparatively, 27.8% of LexinFintech 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.

Summary

Credit Acceptance beats LexinFintech on 9 of the 14 factors compared between the two stocks.

About Credit Acceptance

Credit Acceptance Corporation engages in the provision of financing programs, and related products and services in the United States. The company advances money to automobile dealers in exchange for the right to service the underlying consumer loans; and buys the consumer loans from the dealers and keeps the amount collected from the consumers. It is also involved in the business of reinsuring coverage under vehicle service contracts sold to consumers by dealers on vehicles financed by the company. The company serves independent and franchised automobile dealers. Credit Acceptance Corporation was incorporated in 1972 and is headquartered in Southfield, Michigan.

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.