Critical Survey: EZCORP (NASDAQ:EZPW) and LexinFintech (NASDAQ:LX)

EZCORP (NASDAQ:EZPW) and LexinFintech (NASDAQ:LX) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, profitability, institutional ownership, earnings, risk, dividends and analyst recommendations.

Insider and Institutional Ownership

99.8% of EZCORP shares are owned by institutional investors. 2.1% of EZCORP shares are owned by company insiders. Comparatively, 27.8% of LexinFintech shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings and price targets for EZCORP and LexinFintech, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
EZCORP	0	2	2	1	2.80
LexinFintech	0	0	2	0	3.00

EZCORP presently has a consensus price target of $18.50, suggesting a potential upside of 10.98%. LexinFintech has a consensus price target of $13.60, suggesting a potential upside of 115.19%. Given LexinFintech’s stronger consensus rating and higher probable upside, analysts plainly believe LexinFintech is more favorable than EZCORP.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
EZCORP	7.96%	11.85%	6.13%
LexinFintech	11.50%	14.67%	7.17%

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
EZCORP	$1.16 billion	0.87	$83.10 million	$1.28	13.02
LexinFintech	$1.95 billion	0.55	$150.76 million	$1.27	4.98

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

Risk and Volatility

EZCORP has a beta of 0.56, suggesting that its share price is 44% less volatile than the S&P 500. Comparatively, LexinFintech has a beta of 0.47, suggesting that its share price is 53% less volatile than the S&P 500.

Summary

LexinFintech beats EZCORP on 8 of the 14 factors compared between the two stocks.

About EZCORP

EZCORP, Inc. provides pawn services in the United States and Latin America. The company operates through three segments: U.S. Pawn, Latin America Pawn, and Other Investments. The company offers pawn loans collateralized by tangible personal property, jewelry, consumer electronics, tools, sporting goods, and musical instruments. It also retails merchandise, primarily collateral forfeited from pawn lending operations and pre-owned merchandise purchased from customers. In addition, the company provides EZ+, a web-based application that allow customers to manage their pawn transactions, layaways, and loyalty rewards online. Further, it operates under the EZPAWN, Value Pawn & Jewelry, Empeño Fácil, Cash Apoyo Efectivo, GuatePrenda, and MaxiEfectivo brands. EZCORP, Inc. was incorporated in 1989 and is headquartered in Austin, Texas.

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.