Contrasting X Financial (NYSE:XYF) & Vroom (NASDAQ:VRM)

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

Analyst Recommendations

This is a breakdown of recent ratings for Vroom and X Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Vroom	1	0	0	0	1.00
X Financial	0	1	0	0	2.00

Insider and Institutional Ownership

25.8% of Vroom shares are owned by institutional investors. Comparatively, 1.1% of X Financial shares are owned by institutional investors. 2.9% of Vroom shares are owned by insiders. Comparatively, 31.6% of X Financial shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Volatility and Risk

Vroom has a beta of 1.27, meaning that its stock price is 27% more volatile than the S&P 500. Comparatively, X Financial has a beta of 0.47, meaning that its stock price is 53% less volatile than the S&P 500.

Profitability

This table compares Vroom and X Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Vroom	-32.38%	-47.65%	-5.59%
X Financial	9.94%	9.14%	5.20%

Earnings and Valuation

This table compares Vroom and X Financial”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Vroom	$10.09 million	4.65	-$7.96 million	($11.12)	-0.81
X Financial	$5.60 billion	0.04	$209.43 million	$1.96	2.59

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

Summary

X Financial beats Vroom on 9 of the 12 factors compared between the two stocks.

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.

About X Financial

X Financial provides personal finance services in the People’s Republic of China. The company offers services as an online marketplace connecting borrowers and investors or institutional funding partners. Its loan products include Xiaoying credit loan, which consists of Xiaoying card loan; and Xiaoying preferred loan to small business owners. The company also offers Xiaoying housing loan, a home equity loan product for property owners; investment products through Xiaoying wealth management platform, such as funds, money market, and insurance products; and loan facilitation services to other platforms. In addition, it engages in the technology development, service, and sale of products; and provision of guarantee and consulting services. The company was incorporated in 2014 and is headquartered in Shenzhen, the People’s Republic of China.