Head to Head Contrast: Aaron’s (NYSE:PRG) versus LexinFintech (NASDAQ:LX)

Aaron’s (NYSE:PRG) and LexinFintech (NASDAQ:LX) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, risk, valuation, profitability, earnings, institutional ownership and dividends.

Risk and Volatility

Aaron’s has a beta of 1.75, indicating that its share price is 75% more volatile than the S&P 500. Comparatively, LexinFintech has a beta of 0.47, indicating that its share price is 53% less volatile than the S&P 500.

Institutional & Insider Ownership

97.9% of Aaron’s shares are owned by institutional investors. 3.2% of Aaron’s shares are owned by insiders. Comparatively, 27.8% of LexinFintech shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Aaron’s and LexinFintech”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Aaron’s	$2.46 billion	0.54	$197.25 million	$5.06	6.60
LexinFintech	$1.95 billion	0.58	$150.76 million	$1.27	5.28

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Aaron’s	8.53%	22.54%	9.98%
LexinFintech	11.50%	14.67%	7.17%

Dividends

Aaron’s pays an annual dividend of $0.52 per share and has a dividend yield of 1.6%. LexinFintech pays an annual dividend of $0.18 per share and has a dividend yield of 2.7%. Aaron’s pays out 10.3% of its earnings in the form of a dividend. LexinFintech pays out 14.2% 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. Aaron’s has increased its dividend for 2 consecutive years.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Aaron’s and LexinFintech, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Aaron’s	1	1	4	1	2.71
LexinFintech	0	0	2	0	3.00

Aaron’s currently has a consensus price target of $41.00, suggesting a potential upside of 22.83%. LexinFintech has a consensus price target of $13.60, suggesting a potential upside of 102.99%. Given LexinFintech’s stronger consensus rating and higher probable upside, analysts plainly believe LexinFintech is more favorable than Aaron’s.

Summary

Aaron’s beats LexinFintech on 12 of the 18 factors compared between the two stocks.

About Aaron’s

PROG Holdings, Inc. (NYSE:PRG) is a financial technology holding company based in Salt Lake City, Utah with three business segments: Progressive Leasing, which offers lease-to-own transactions primarily to credit-challenged consumers through e-commerce and point-of-sale retail partners, via online, mobile, and in-store solutions; Vive Financial, which provides consumers who may not qualify for traditional prime lending with a variety of second-look, revolving credit products through private label and branded credit cards; and Four Technologies, which provides consumers of all credit backgrounds Buy Now, Pay Later (BNPL) options through four interest-free installments via its platform, Four.

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.